How Embedded Finance Is Reimagining the Point of Payment in Kenya
Relationship Manager & Founder of Bengula Inc.
How Embedded Finance Is Reimagining the Point of Payment in Kenya
Kenya did not wait for embedded finance to become a global trend. M-Pesa launched in 2007 and by 2023 had over 50 million users facilitating billions in transactions annually, the first large-scale proof that financial services could live inside a non-bank product and work better than the bank alternative.
What has changed since then is the scope. M-Pesa started as a payments tool. It is now a comprehensive embedded finance ecosystem delivering savings, credit, insurance, and investment products inside a single mobile interface. Every platform that followed has borrowed the same logic: put the financial product where the customer already is, rather than building a separate destination they have to navigate to.
Kenya's digital payments market is projected to reach US$14.54 billion by 2028, growing at a CAGR of 14.1% from 2024. Mobile money penetration hit 91% in June 2025, with 47.7 million active subscriptions. The infrastructure is mature. The question now is what gets built on top of it.
What Embedded Finance Actually Is
Embedded finance is the integration of financial products, payments, lending, insurance, investment, directly into non-financial platforms, so the customer never has to leave the app or service they are already using to complete a financial transaction.
It is narrower than Banking-as-a-Service, which is the underlying infrastructure model. Embedded finance is the customer-facing layer: the BNPL option at Jumia checkout, the insurance bundled with an Apollo Agriculture purchase, the working capital loan offered inside a merchant's POS system. BaaS is how the bank's rails get exposed. Embedded finance is what the customer actually experiences.
Three things are not embedded finance:
- A bank's own mobile app (that is still a bank destination)
- Open banking (that is data access, not product delivery)
- A payment gateway integration (that is a checkout tool, not a financial product embedded in a workflow)
Why Kenya Is the Reference Market for Embedded Finance in Africa
The Africa embedded finance market reached US$13.2 billion in 2025 and is projected to grow to US$18 billion by 2030, a CAGR of 8.1%. Kenya is the continent's most advanced embedded finance market for three structural reasons:
Mobile infrastructure at scale. 47.7 million active mobile money subscriptions as of June 2025, with 76.7 million SIM subscriptions representing 146.3% penetration. Many Kenyans hold multiple SIMs, the financial rail is embedded in the device, not in a branch.
Regulatory clarity. CBK's Digital Credit Providers licensing process has formalised embedded lenders, requiring minimum capital and consumer protection standards. CBK also operates a regulatory sandbox for fintechs testing new embedded models, a signal that the regulator is ahead of the innovation rather than behind it.
Proven partnership infrastructure. The Safaricom and NCBA collaboration on M-Shwari is the reference case: a bank's balance sheet and licence behind a telco's customer interface, delivering credit to millions of Kenyans who had never had a formal loan. Every embedded finance partnership in Kenya traces its model to this deal.
Five Use Cases Reshaping Kenyan Commerce
1. Frictionless Payments
The baseline use case. A non-financial platform integrates M-Pesa, card payments, or bank transfers directly into its checkout or service flow so customers do not have to switch apps or enter separate banking credentials.
A travel app offering forex conversions before flight booking. A supermarket chain accepting wallet payments at self-checkout. A utility company receiving bill payments inside WhatsApp. These integrations remove the friction of navigating separate banking platforms, and friction reduction directly increases conversion rates for merchants.
The commercial logic for merchants is straightforward: every additional step between intent and payment is a drop-off point. Embedded payments eliminate the steps.
2. Personalised Credit and BNPL
BNPL solutions like Lipa Later in Kenya are expanding rapidly, increasing consumer purchasing power and driving sales for merchants. The model works because the platform offering the credit has transaction data the bank does not, purchase history, return rates, session frequency, average order value, and can underwrite at the point of sale in real time.
M-Pesa's integration with Hustler Fund created an embedded microcredit channel tied directly to mobile usage patterns, not credit scores, not salary slips, but behavioural data from how the customer already uses the platform. That is the underwriting breakthrough: embedded credit scores borrowers on what they do, not what they declare.
3. Customer Loyalty and Behavioural Incentives
Embedded finance generates transaction data at a level of granularity that standalone banking cannot match. A platform that sees every purchase, every category, every frequency pattern can personalise financial products, and loyalty rewards, to individual behaviour rather than demographic segments.
Tesco Clubcard Pay+ demonstrated this globally: customers who accessed embedded banking services tripled their loyalty point accrual through expanded product categories. The same model is available to Kenyan retail platforms, an FMCG distributor that offers embedded wallets to its retailer network gets live visibility into stock purchases, payment patterns, and revenue cycles. That visibility is both a credit underwriting tool and a customer retention mechanism.
4. Embedded Insurance
Lami Technologies and Turaco are building API-based insurance integrations targeting gig platforms and agritech ecosystems in Kenya. The embedded insurance model works by attaching a micro-insurance product to an existing transaction, a farmer buying seeds through Apollo Agriculture gets crop insurance bundled at checkout, priced on satellite data about their specific plot rather than actuarial tables designed for large commercial farms.
Pula Advisors embeds micro-insurance directly into agricultural purchases for smallholder farmers, a population that has historically been excluded from formal insurance because the unit economics of servicing individual small policies made them unprofitable for traditional insurers. Embedded distribution changes that calculation entirely.
5. Embedded Investment and Securities Access
The most recent and significant development: the Nairobi Securities Exchange is planning to allow investors to fund brokerage accounts and execute equity transactions directly through M-Pesa. The NSE's stated target is growing active retail investors from current levels to nine million by 2029.
This is embedded finance applied to capital markets. The structural gap it addresses: Safaricom reports more than 35 million active M-Pesa users, but the NSE has historically served a narrow investor base because funding required a bank account rather than a mobile wallet. Embedding equity access into M-Pesa meets investors where their liquidity already sits.
The parallel: M-Akiba, Kenya's mobile-first government bond product, already demonstrated that retail uptake of investment products scales dramatically when the onboarding and funding mechanism is mobile money rather than a bank account. The NSE is applying the same lesson to equities.
Key Players in Kenya's Embedded Finance Ecosystem
Safaricom / M-Pesa. The foundational rail. M-Pesa is no longer just payments, it is the platform on which savings (M-Shwari, Mali), credit (Fuliza, Hustler Fund), insurance (M-Tiba, Bima), and now equities are being embedded. Every other embedded finance provider in Kenya either integrates with M-Pesa or competes against it for the customer interface.
NCBA Bank. Primary bank partner for M-Shwari and Fuliza, the canonical example of a bank's balance sheet and licence sitting behind a telco's customer relationship. The bank holds the regulated infrastructure. The telco holds the customer.
Lipa Later. Kenya's leading BNPL provider, embedded into e-commerce and retail checkout flows. Allows customers to split purchases across instalments without leaving the merchant's platform.
Lami Technologies. API-first insurtech building embedded insurance integrations across gig platforms, agritech, and logistics companies. Allows any platform to add insurance as a product line without becoming a licensed insurer.
Pezesha. Embedded SME lending platform, integrating working capital credit into the business management tools and platforms that SME owners already use daily.
Apollo Agriculture. Agritech platform embedding input financing, crop insurance, and market access into a single mobile product for smallholder farmers, the clearest Kenyan example of sector-specific embedded finance creating a complete financial services stack for a previously underserved population.
Churpy. Embedding invoice reconciliation and receivables automation into enterprise platforms, embedded finance applied to the B2B corporate finance layer rather than consumer retail.
PesaPal, DPO Group, Cellulant. Payment gateway providers that give merchants multi-method payment access, cards, mobile money, bank transfers, through a single integration point.
What Embedded Finance Means for Kenyan Businesses
For merchants and platforms. Embedded payments increase conversion. Embedded credit increases average order value. Embedded insurance increases trust for high-value purchases. Each financial product embedded into a platform workflow adds a revenue line that did not require building a separate financial product from scratch.
For banks. Embedded finance is both an opportunity and a threat. Banks that open their infrastructure to platforms via BaaS rails get distribution they cannot build themselves. Banks that do not adapt risk losing the customer interface entirely, the payment, the loan, and the insurance all originating inside a non-bank app, with the bank invisible and marginalised to the balance sheet role.
For SMEs. The most immediate benefit is credit access. Embedded credit products using transaction-level data are becoming the default financing route for small enterprises in Kenya, with invoice factoring, revenue-based lending, and inventory credit all being embedded within sector-specific platforms. An SME with six months of transaction history on a digital platform can now access working capital that a bank would have required three years of audited accounts to consider.
For investors. Embedded finance is the distribution layer for retail financial products in Kenya. Any investment product that cannot be accessed through a mobile wallet, government bonds, equities, unit trusts, insurance, faces a structural adoption ceiling. M-Akiba and the NSE's M-Pesa integration are proof that removing the bank-account requirement unlocks order-of-magnitude increases in retail participation.
The Regulatory Landscape
CBK is the primary regulator for embedded finance involving credit and banking products. Three regulatory developments shape the current environment:
DCP licensing. All digital credit providers must be licensed by CBK, hold minimum capital, and meet consumer protection standards. This applies to embedded lenders operating on non-bank platforms.
Regulatory sandbox. CBK operates a formal sandbox for fintechs testing new embedded models, alternative credit scoring, embedded health savings, microinsurance distribution through telcos. Fintechs can test at limited scale before seeking full licensing.
Open banking progression. CBK's open banking framework is still developing. The direction is toward consent-based data sharing that will deepen embedded finance use cases, allowing platforms to access a customer's banking data (with consent) to underwrite credit, personalise products, and reduce onboarding friction. The regulatory posture is enabling rather than restrictive.
The Shift in One Line
Embedded finance does not put banking into apps. It removes the need to think about banking at all, the financial product is just part of the workflow, the way airtime top-up became part of making a phone call in Kenya long before M-Pesa existed.
The platforms that understand this build finance into the experience from day one, rather than adding it as a feature later. The ones that do not will hand the customer relationship to someone who did.
Sources and Further Reading
- Kenya's Mobile Money Market Hits 91% Penetration, FinTech Magazine
- Africa Embedded Finance Business Report 2025, ResearchAndMarkets
- Embedded Finance in Africa, EFGH Knowledge Hub
- Kenya Opens Equity Trading to Retail Investors via M-Pesa, Finance in Africa
- Fintech Kenya 2026 Landscape, SDK Finance
- Africa Embedded Finance Expansion 2025-2030, GlobeNewswire
- Bengula Inc: Banking-as-a-Service in Kenya, Ultimate Guide to Banking in Kenya, How to Build an Accurate Startup Budget