Capital Markets

CBK reinstates bank M-Pesa fees in a big win for lenders

Patrick Njoroge

Central Bank of Kenya (CBK) Governor Patrick Njoroge. PHOTO | DIANA NGILA | NMG

The Central Bank of Kenya (CBK) has announced the reinstatement of charges on transfers of money between bank accounts and mobile money wallets in a move that will offer relief for commercial banks that have for months decried the regulator’s reluctance to reinstate the fees.

The charges were waived on March 16, 2020, as part of the emergency measures to facilitate the use of mobile money at the height of the Covid-19 pandemic.

In a notice published on Tuesday, CBK said the reintroduced charges, which will come to effect on January 1 next year, will be significantly lower than those that applied before.

“The revised maximum charges for transfers from bank accounts to mobile money wallets will be reduced by on average up to 61 percent, and mobile money wallet to bank account by on average up to 47 percent,” said CBK.

“Tariffs for paybills that are used to collect and disburse funds by businesses, companies and institutions will be reduced on average 50 percent while charges levied by banks for banks to mobile money transactions will be reduced by on average 45 percent,” the regulator added.

Respective payment service providers and banks will announce the revised transaction charges before January 1.

The apex bank revealed that the waiver resulted in a significant expansion of the payments ecosystem, noting that between March 2020 and October 2022, the number of Kenyans actively using mobile money increased by over 6.2 million.

In the same period, CBK notes, the monthly volume and value of peer-to-peer transactions surged from 162 million transactions worth Sh234 billion to 440 million transactions worth Sh399 billion, representing 171 percent and 71 percent increases respectively.

Further, the monthly volume and value of transactions between payment service providers and banks increased from 18 million transactions worth Sh157 billion to over 113 million transactions worth Sh800 billion, marking five-fold and four-fold increases respectively. 

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

Since last year, commercial banks have pressured their regulator to reinstate the charges citing heavy investments in digital technology to keep pace with growing transactions.

The lenders used to charge between Sh30 and Sh197 before the waivers were introduced.

The regulator rejected the push to reinstate the fees at the end of 2020 when it ended free M-Pesa transactions of up to Sh1,000.

In their lobbying over the months, banks said they were losing millions per month due to the free transfers between themselves and wallets, arguing the reinstatement of the fees would level the field between banks, telecoms companies and micro lenders.

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