Use of bank cards in the purchase of goods and services has fallen to a six-year low as consumers increasingly use alternatives such as cash and mobile money payments.
The value of credit and debit card transactions in the ten months to October 2024 fell to Sh465.4 billion from Sh533.4 billion in the same period last year, according to Central Bank of Kenya (CBK) data.
The use of these cards to make payments had also declined to Sh588.1 billion in the first ten months of 2022 from Sh625.15 billion in the same period in 2021. This was from Sh517.7 billion in the same period in 2020 and Sh579.2 billion in 2019.
Consumers are using credit and debit cards for retail payments less compared to cash and mobile money platforms.
Mobile transactions hit an all-time high of Sh7.2 trillion in the ten months to October 2024, up from Sh6.45 trillion posted in a similar period last year.
The number of registered mobile accounts rose to 81 million in the month of October 2024 from 76 million in the same month last year, signalling the increased uptake of the platforms run by telecommunications firms.
Late last year, CBK granted Safaricom, Telkom Kenya and Airtel Kenya approvals to increase the daily money transaction limits and account limits to further boost the uptake of mobile payments.
The move was seen as particularly key for micro, small, and medium enterprises (MSMEs), which had been constrained by the account and transaction limits even as the share of cashless transactions increased.
Amid tough economic conditions, Kenyans are becoming creative by sending money in small amounts to evade higher charges even as mobile payments increasingly displace cash in daily use.
The latest FinAccess Household survey from the CBK shows that point of sale or card swapping machines are the least preferred channels of bank usage at 1.5 percent compared to mobile banking USSD at 38.2 percent and mobile banking apps at 45.7 percent from a survey of 28,275 households and 1,885 enumeration areas.
“52.6 percent of Kenyans now use mobile money daily, more than doubling, from 23.6 percent in 2021, indicating increased digitalisation of payments,” the CBK said in the FinAccess report.
“Urban members show higher adoption rates of digital payment options such as paybill services, with usage at 28.5 percent compared to 14.3 percent in rural areas. Interestingly, female members prefer this channel more strongly than male members, potentially due to its simplicity and accessibility.”
The State had latched on to the increased use of mobile payments to boost tax revenue collection.
The use of mobile money, which was already showing strong growth, rose further in the wake of the Covid-19 pandemic in early 2020 when fees on the platforms were reduced and people sought to minimise use of cash and cards for health reasons.
The CBK had also waived charges on transactions between mobile money wallets and bank accounts before reinstating them in January 2023 at reduced rates compared to earlier tariffs.
