Charges on bank to mobile deals lift M-Pesa revenue


A Safaricom's M-Pesa app user. FILE PHOTO | DIANA NGILA | NMG

The reinstatement of charges on bank-to-mobile transactions has helped lift revenue for Safaricom’s platform M-Pesa.

The Central Bank of Kenya (CBK) waived the fees on cash transferred from banks to mobile wallets and vice versa from mid-March 2020 until the end of last year.

The charges were reintroduced —though at reduced levels— at the start of this year and helped boost Safaricom’s revenue in the last three months of its financial year ended in March.

Read: Cost of sending mobile cash up, bank transfers to fall

The telco’s total revenue from these transactions rose 25.7 percent to Sh2.6 billion in the year under review, up from Sh2.07 billion the year before.

Revenue from mobile wallets to bank accounts, on the other hand, increased 13.9 percent to Sh19.13 billion.

For bank-to-mobile deals, most of the charges go to the lenders and the telco takes a smaller piece of the fee in their revenue-sharing agreements.

While the tariffs for the transactions were cut significantly, banks and Safaricom, which has the largest share of mobile money, could grow their revenue if the growth of digital payments continues to rise.

Banks reduced their charges by an average of 45 percent while Safaricom and Airtel slashed their fees by an average of up to 47 percent.

The fees were waived to offer financial relief to consumers besides enhancing uptake of cashless transactions in the context of the Covid-19 pandemic, which was spreading through contact with contaminated items among other means.

Removal of the fees led to a surge in digital payments, the CBK said.

Between March 2020 and October 2022, the number of Kenyans actively using mobile money increased by over 6.2 million.

Over the same period, the monthly volume and value of person-to-person transactions increased from 162 million transactions worth Sh234 billion to 440 million transactions worth Sh399 billion.

Read: Top banks eye billions from mobile transaction fees

“This outcome confirms that the mitigation measures were timely and effective, and resulted in significant benefits across the financial system,” the CBK said in December.

“The resumption of revised charges is aimed at building on these gains, facilitating a transition towards sustainable growth of the mobile money ecosystem, and ensuring affordability of payment services for Kenyans.”

[email protected]