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Absa to cut rates if bank to mobile fees reinstated

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Absa bank along Muindi Mbingu Street in Nairobi on April 9, 2020. PHOTO | EVANS HABIL | NMG

Absa Bank Kenya #ticker:ABSA chief executive Jeremy Awori says the bank will revise bank to mobile transaction fees downwards if the Central Bank of Kenya (CBK) re-introduces the fees that have been frozen for two years.

The regulator waived the fees to offer financial relief to customers in the wake of the Covid-19 pandemic in mid-March 2020.

Before the financial reliefs were introduced, most bank-to-mobile transactions attracted fees ranging from Sh30 to Sh197.

Mr Awori said the number of transactions between banks and mobile wallets has jumped significantly, offering an opportunity to lower cost due to the growing economies of scale.

“We would like to see them (fees) come back and I think over time we will have to keep reviewing our charges because obviously if the volumes are going up then there will be opportunities for the charges to come down,” Mr Awori said.

He said as adoption of automated channels expands, “we also (need to ) find ways of passing on those benefits just as we have done for interest rates. As rates came down we did not keep our absolute rates up. We passed on those benefits to customers while still retaining our margins.”

At the end of 2020, the CBK rejected a push by most banks to reinstate fees on the transfer of cash between accounts and mobile phone wallets, even as it ended free M-Pesa transactions of up to Sh1,000.

Co-op Bank was allowed to reinstate charges on its MCo-op cash platform though at reduced rates than before. The regulator said platforms such as MCo-op offer unique services to savings and credit societies (saccos).

Other institutions are yet to persuade CBK to allow a return to charging fees, losing billions of shillings’ worth of transaction-based income.

Mr Awori said that if the charges are not reinstated, there is a risk banks will stop investing and innovating. “When you are investing on a mobile platform it is based on a return, it is not a free service,” he said.-

“The thing that is causing a little worrying is that if it stays for long we are going to see innovation and services coming out of the platform reduce.”

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