Growth in plastic card payments slows down as Kenyans opt for mobile money
A Safaricom agent transacts at an M-Pesa outlet. Recent Central Bank of Kenya data shows that Kenyan’s are increasingly shunning credit and debit cards in favour of mobile money platforms when making transactions. PHOTO | FILE
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The amount settled through the cards was just 0.7 per cent higher at Sh427.6 billion in the period compared to Sh424.8 billion in the same period last year, data from the Central Bank of Kenya (CBK) shows.
But in 2013, the cards payment value reached the highest amount ever with Sh549.6 billion transacted in the first four months of the year, showing that the value has since declined.
Analysts attribute the fall in the value of card payments to the increased popularity of mobile money platforms.
Plastic card payments in the first four months of the year rose only marginally relative to the same period last year, but remained well below the high achieved in the same period in 2013.
The amount settled through the cards was just 0.7 per cent higher at Sh427.6 billion in the period compared to Sh424.8 billion in the same period last year, data from the Central Bank of Kenya (CBK) shows.
But in 2013, the cards payment value reached the highest amount ever with Sh549.6 billion transacted in the first four months of the year, showing that the value has since declined.
Analysts attribute the fall in the value of card payments to the increased popularity of mobile money platforms such as Safaricom’s M-Pesa, and Airtel Money.
“The financial world landscape is shifting focus from traditional plastic card payments to “tap and pay” payments.... Many payment services have been integrated into the platform,” said Genghis Capital analyst Mercyline Gatebi in a research report.
The lower value of payment through cards in both 2014 and 2015 was more pronounced viewed against the fact that there was an 87.2 per cent increase in the value in 2013 compared to 2012.
There was also a 2.9 per cent decline in April when the value transacted stood at Sh110.6 billion compared to the previous month when total card payments were Sh113.8 billion.
In a previous interview, Peter Muriu, who teaches economics at the University of Nairobi, said the convenience of mobile money had made it increasingly popular relative to the traditional card payments.
“Merchants are accepting mobile money for purchases, both for its convenience as well as the low fees charged. There is less paperwork, more transparency and accountability via the electronic records, and more independence and self-sufficiency for users,” said Dr Muriu.
Though the growth in the value of the card payments is falling, the number of cards issued has increased every month during the first four months to reach a total of 14.2 million in April, up from 13.997 million the previous month and 13.6 million in January.
The higher number of cards means that though people continue to obtain them, the pace at which they are using them is not rising as fast and has in fact fallen relative to 2013.
Ms Gatebi said that the integration of many payment services into the mobile money platform has made it even more popular compared to card payments.
Such services include Lipa na M-Pesa, M-Shwari, Bank-to-M-Pesa, Lipa Kodi, salary disbursements, utility payments, airtime purchases and cashless distribution for fast moving consumer goods companies.
The CBK data also shows that while the number of ATM, debit and pre-paid cards has been rising steadily, the number of credit cards fell in April by nearly 15,000 units indicating a preference for cash or prepaid cards for settling bills to avoid incurring debt.
Compared to March this year, the increase in the number of prepaid cards in April was 12.3 per cent higher to a total of 1.4 million while the number of credit cards fell by 7.1 per cent to just 198,893.
The number of ATM and point-of-sale machines has been largely flat this year relative to last year.
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