Safaricom cuts low value M-Pesa fees in CBK deal

Safaricom #ticker:SCOM has cut low value M-Pesa transaction fees by up to 45 per cent in line with a deal agreed with the Central Bank of Kenya (CBK) that ended free mobile phone money transactions of up to Sh1,000.

It will now cost Sh6 to send between Sh101 and Sh500, down from Sh11. Transactions of between Sh1,501 and Sh2,500 will cost Sh32 down from Sh41.

The telco is betting on volumes to cover for the low fees after the waiver of charges on M-Pesa transactions cost the telco giant Sh9 billion in the six months to June.

The 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.

Safaricom said yesterday the lower fees was in line with an agreement with the banking regulator

“As guided by the Central Bank of Kenya and taking into account the Principles on the Pricing of Mobile Money Services, we have taken the decision to reduce our M-Pesa tariffs by up to 45 per cent for lower value transaction bands,” said chief executive Peter Ndegwa.

It cut the cost of sending money for transactions below Sh15,000 but failed to comment on withdrawal charges.

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.

The CBK said since the waiver was introduced the monthly volume of person-to-person transactions increased by 87 per cent between February and October 2020.

Over this period the volume of transactions below Sh1,000 increased by 114 per cent, while 2.8 million additional customers are using mobile money. Business-related transactions also recorded significant growth over the same period.

Safaricom said the free M-Pesa transfer cost it Sh9 billion in the six months to June, which saw the firm report a six percent drop in net profit to Sh33.07 billion — the first fall in nine years.

At Sh9 billion, the estimated revenue loss is equivalent to 25 per cent of the Sh35.88 billion Safaricom made from the M-Pesa platform in the six months to September and 7.2 per cent of total revenue in the same period.

The telcos revealed the new tariffs after CBK moved to end the waiver on free M-Pesa transactions below Sh1000.

Safaricom said the new cheaper fees would cover 90 per cent of transactions.

All transactions of Sh100 and below will remain free and all M-PESA customers will continue to enjoy free mobile money services between M-Pesa and bank accounts.