Safaricom’s #ticker:SCOM commissions paid to M-Pesa agents rose 18.4 percent in the year ended March on the back of increased bank deposits via the mobile money platform due to the removal of transfer fees last year.
The telco paid the agents Sh28.21 billion, up from Sh23.82 billion in the year ended March 2020, as M-Pesa to bank transactions surpassed bank to M-Pesa transfers for the first time.
M-Pesa Africa managing director Sitoyo Lopokoiyit said the platform saw a significant jump in deposit volumes as customers used M-Pesa to deposit money they would have otherwise deposited directly to banks.
Customers also enjoyed convenience from the expanded network of M-Pesa agents unlike in banks where they have to queue to complete such transactions.
“Businesses that have collected cash would go to an agent, deposit that money then send it to the bank because it’s a free channel,” said Mr Lopokoiyit.
“What this means is that agents around businesses are doing more transactions, which means more commission because we pay deposits commissions on that.”
The value of M-Pesa transactions grew 58.2 percent to Sh22.04 trillion as volumes of transactions grew by 29.8 percent to 11.68 billion.
The business added 3.4 million one month active M-Pesa customers to hit 28.31 million users, partly driven by free M-Pesa transfers of Sh1,000 and below as well as free transactions between M-Pesa wallets and banks accounts.
The number of active M-Pesa agents rose by 43.1 percent to 247,870 in the review period from 173,260 in the previous financial year.
Free transactions
Safarciom however missed out on revenue that it ordinarily charges customers to transfer money from M-Pesa to bank accounts.
“We still had to pay for the commissions on deposits, and so increase in the deposit commission was from there. We did not earn revenue that we should have earned, and then we incurred more costs,” said Dilip Pal, Safaricom chief finance officer.
It is not clear how long free transactions between banks’ wallets and M-Pesa will last after the regulator in December chose to retain it.
Banks are losing millions per month due to the free transfers between them and M-Pesa given that they used to charge fees ranging from Sh30 to Sh197 before the waivers were introduced.
The free transactions were introduced mid-March last year alongside free M-Pesa transfers of Sh1,000 and below to discourage cash handling in Covid-19 environment.
Central Bank of Kenya in December ended the free M-Pesa transfers that had cost Safaricom billions of shillings in fees.
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