M-KOPA sold solar on credit using a remote kill switch as collateral

Millions of East African households off the electrical grid relied on kerosene lamps — expensive, dim and dangerous — because a solar home system cost more upfront than most families could pay in cash. Financing the purchase was the obvious fix, but it ran straight into a wall: rural, informally-employed customers had no credit bureau history, no payslips, no collateral a bank could repossess, and no formal way to prove they would repay a loan.

A lender that ignored this and financed anyway had no real recourse if a customer stopped paying — a solar panel bolted to a mud-brick roof deep in rural Kenya is not an asset any lender can practically go and repossess.

Launched in Kenya in 2012, M-KOPA sold a small solar home system for a deposit plus daily payments made by mobile money, and built the enforcement mechanism directly into the hardware: the system's control unit could be remotely disabled the moment a payment was missed, and switched back on the instant it was received, with missed days simply added to the end of the payment term rather than penalized. After roughly a year of payments the customer owned the unit outright, and the payment record itself became a credit history the customer had never had before.

Made the collateral enforce itself: a remotely lockable solar unit is worthless to a defaulter, so no credit history was needed.

Remote lock makes non-payment immediately costly, deterring default.

Reactivation on payment keeps customers engaged and builds trust.

Hardware-based enforcement removes need for credit history or repossession.

Completed payments create a credit history, enabling future financing.

When customers lack formal credit, embed the enforcement mechanism into the product itself so non-payment is immediately costly and reversible.

M-KOPA served 4.8 million customers and disbursed $1.6 billion in credit in Kenya, filing 250,000 first-ever credit reports. The remote-lock, pay-as-you-go model became the standard financing structure across the entire off-grid solar industry, and the same collateral-by-hardware logic has since been carried into pay-as-you-go financing for phones, cookstoves and other durable goods across emerging markets.