Equity Bank wants say on proposed M-Pesa fees change


Equity Bank says it has had many hurdles since the launch of Equitel. PHOTO | FILE

Safaricom does not have a unilateral right to increase M-Pesa fees charged on banks that offer mobile money services, the Equity Bank CEO James Mwangi has said.

Instead, Equity and other commercial banks will have a say on the proposed M-Pesa charges for transfers of cash made from bank accounts to Safaricom’s mobile money platform, Mr Mwangi said at a media briefing on Thursday.

The Equity Bank CEO said a payment services management board that is to be set up by the Central Bank of Kenya (CBK) will give the lenders a voice in determining what Safaricom charges on transfer from banks to mobile money transfer platforms, eliminating “arbitrary” decisions by the telecommunication firms when setting such fees.

Mr Mwangi said the absence of such a board made it difficult for banks to negotiate, leading to arbitral decisions by the leading telco provider, an allegation that Safaricom has refuted saying all rates proposed by the firm are approved by CBK before they are communicated to its partners.

“We have had numerous road blocks since we introduced Equitel, the last one was quite hilarious when we woke up one morning only to be informed that charges of transaction from Equitel to M-Pesa were up almost by 300 per cent and these charges were effective from August 1.

This has, however, been reversed to December,” Mr Mwangi said at Thursday’s briefing.

READ: Safaricom hits banks with new M-Pesa transfer fees

The effect of the increase in fees for direct transfers of cash from a bank to M-Pesa customers is that Equitel, which is Equity Bank’s mobile banking service, will be forced to increase charges for its services to a level that could put it at a disadvantage when competing with M-Pesa.

Transfer of money from Equitel to M-Pesa has since reverted to Sh33, the previous charge.

“The good thing is that the regulator (CBK) is setting up a private sector board that will be dominated by banks to handle such fees. Equity will now approve this. The abuse of market dominance power is over,” he added.  

On Monday, the Central Bank’s head of the national payments system, Stephen Mwaura Nduati, was quoted in the Daily Nation as saying  that the regulator is setting up a payments services management board — The Payments Association of Kenya — that will draw in telcos, switch operators, aggregators, electronic-money issuers, banks and other financial service providers.

The Payments Association of Kenya will harmonise inter-change charges across varied financial service providers.

The infrastructure will be shared and rules of engagement with each other and settlement of payments worked out.

Stephen Chege, the Safaricom director for corporate affairs, Thursday said that Safaricom had consulted and obtained the approval of the CBK prior to announcing the proposed Bank-to-M-Pesa charges that will affect all banks carrying out the new service.

“Safaricom routinely consults its partners within the banking circles and thereafter the Central bank of Kenya before any new rates are introduced,” said Mr Chege.

“Safaricom has voluntarily moved the implementation date to Dec 2015 and is already in consultation with the affected banks regarding the mechanics of implementing the new rates,” he added.