Fuel dealers pass half of Lipa na M-Pesa cost to clients

Safaricom customers using the Lipa na M-Pesa service to buy fuel will have to pay a 0.5 per cent commission on the value of every payment made through the system.

This follows a decision by some fuel station dealers to pass on half of the one per cent commission charges that they pay to Safaricom to their customers citing low profit margins in the tightly regulated industry.

A motorist spending Sh2,000 for fuel and using Safaricom’s mobile money wallet will pay Sh10 more compared to a person paying using cash or plastic cards.

Safaricom CEO Bob Collymore on Wednesday said the charge on Lipa na M-Pesa users was limited to some petrol stations.

“Lipa na M-Pesa service is still free to end users, however some petrol stations are charging 0.5 per cent of the total value,” Mr Collymore told the Business Daily in a telephone interview.

Petrol station owners currently pay a one per cent commission on the value of every payment made through Lipa na M-Pesa from the initial 1.5 per cent that Safaricom used to charge during the first months of the service.

Banks charge traders between three and five per cent commission on credit and debit card swipes made by customers, making Lipa na M-Pesa the cheapest cashless payment option for businesses.

The service has registered 49,413 business owners who receive an average of Sh11.6 billion worth of payments per month.

“As a matter of transparency, we are running a campaign to inform our consumers about this, warning them that they may attract some charges in some of the petrol stations,” said Mr Collymore. 

READ: Safaricom targets Nakumatt, Tuskys for Lipa Na M-Pesa

Shopkeepers, kiosks, saloons and vehicle garage owners must register their businesses with Safaricom and get a special till number to offer the service which is seen as the mobile telecom firm’s reply to plastic money and other forms of cashless transactions.

The service can be used to pay for any transaction valued at between Sh10 and Sh70,000. With ordinary M-Pesa transactions a customer buying goods worth Sh500 has to include a Sh27 withdrawal fee amounting to additional costs for the same product compared to cash buyers.

Swiping to pay bills

Data released by the Central Bank of Kenya in February shows that payments made using plastic cards dipped nearly one-fifth last year, the first drop in five years, as swiping to pay bills took a beating from the buoyant mobile money industry.

The data indicated that card payments dipped 17.4 per cent to Sh1.2 trillion last year compared to Sh1.5 trillion in 2013.

In contrast, the volume of cash sent through mobile platforms grew by a quarter to gross Sh2.3 trillion last year — nearly double the value of card payments.

Analysts attributed the drop in card payments to retailers increasingly turning to mobile cash for payments of goods and services due to convenience, cost efficiency and security.

It means Kenyans last year moved an average of Sh6.5 billion every day through mobile money and swiped plastic cards to settle bills to the tune of Sh3.4 billion daily.

The decline in card payment volumes comes at a time when mobile money providers are battling for a piece of the lucrative retail payments market by signing up merchants such as supermarkets, fuel stations and hotels to accept mobile cash.

Other mobile-based retail payment platforms include Lipa Sasa Na MobiKash, Airtel Money’s ‘‘buy goods’’ module while Tangaza Pesa is currently piloting MyDuka.