Banks seek to reinstate mobile cash transfer fees


The Central Bank of Kenya building in Nairobi. PHOTO | DENNIS ONSONGO | NMG

Banks will seek to lobby the Central Bank of Kenya (CBK) to reinstate charges on customers’ transfer of money from bank accounts to mobile money wallets.

The lenders have witnessed a fall in fees and commissions from such transactions and eye the end of the freeze to rev up non-interest income.

The Kenya Bankers Association (KBA)—the lenders lobby—say the easing of Covid-19 effects in the economy would allow it to push for return of the charges next year.

The reliefs on mobile phone payments were introduced from March 16 to encourage cashless payments on mobile phones as part of efforts to contain the spread of the coronavirus.

They included doubling of the daily transaction limits to Sh300,000 after the first case of Covid-19 was reported.

“We may think of lobbying for a review next year if we are convinced that we are sufficiently out of the woods,” said Habil Olaka, the chief executive of KBA

“2021 was very unpredictable when we thought we had gotten out we saw new waves picking up, new restrictions being introduced and even now we do not know how Omicron variants will turn out.”

Banks are losing millions per month due to the free transfers between them and wallets such as M-Pesa given that they used to charge fees ranging from Sh30 to Sh197 before the waivers were introduced.

At the end of last year, CBK rejected bankers’ push to reinstate fees on transfer of cash between accounts and mobile phone wallets, even as it ended free M-Pesa transactions of up to Sh1,000.

Banks failed to lobby the CBK to return the fees of moving money between their mobile wallets and bank accounts that saw some like KCB Group lose Sh1.5 billion in the nine months.

CBK in April announced resumption of charges of bank to mobile wallets that are linked to the Sacco sector, prompting lenders such as Co-operative Bank to roll out discounted rates.

Bankers reckon that the waiver of fees on bank-to-mobile phone transactions triggered an increase in deposits as small businesses embraced the digital channel and cut branch visits for cash deposits.

CBK also said the free M-Pesa service had led to increased use of the mobile money transfer and added users to the telco’s cash service.