Card and mobile money transactions are rebounding this year on the back of improved economic activity that has boosted trade payments and increased borrowing from digital platforms.
Data from the Central Bank of Kenya (CBK) show that the economy recorded Sh114.8 billion worth of card payments in the first two months of 2023, up from Sh110.9 billion in the corresponding period last year.
The value of mobile money transactions through agents also rose in the comparative period to Sh1.17 trillion from Sh1.15 trillion previously.
The rebound in January and February this year boosted expectations of a return to growth for these cashless transactions going forward, following a decline in 2022.
This decline was attributed to economic shocks associated with the General Election, the Russia-Ukraine war and the removal of transaction fee waivers introduced during the Covid-19 pandemic.
Analysts also say the growth in transaction values is attributed to the reopening of schools and more Kenyans borrowing on digital platforms.
“The value and volume of transactions have been growing in line with more people getting banked, Kenyans getting in the job market, population growth and the reopening of schools resulting in more payments done in the first two months of the year,” said Michael Odundo, research analyst at Standard Investment Bank.
“The growth in mobile money between 2022 and 2023 can be linked to more innovation, for example the introduction to the Hustler Fund. The rising inflation suppressed disposable income, resulting in more digital borrowing.”
Most banks have linked their systems with mobile money services allowing customers to move funds from their accounts to their phones and vice versa.
Mobile money platforms were, in the formative years, used primarily for person-to-person cash transfers but are now a major payment channel for businesses, a shift that has led to the growth in the amount of money moved through the wallets.
Business owners now find it convenient to deposit cash at mobile agencies and then transfer it to the bank, saving themselves the hassle of queuing in banking halls and the risk of transporting the cash physically to the bank branch.
The Covid-19 pandemic also proved the viability of a cashless economy following recommendations and incentives put in place to discourage the use of hard cash, which was deemed a potential avenue for spreading the virus.
The use of bank cards to shop has also gained popularity, as is the use of mobile merchant payment options.