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Economy

Card payments up Sh1.6bn despite corona demand slump

 cards
The number of deals settled through cards, however, dropped to 17.98 million in the first quarter of the year. FILE PHOTO | NMG 

The value of payments made through cards grew by Sh1.64 billion in the first three months of the year as the Covid-19 pandemic discourage cash handling.

Central Bank of Kenya (CBK) data shows that transactions via credit, debit cards and point-of-sale (PoS) machines hit Sh165.56 billion in the first quarter of 2020 compared to Sh163.91 billion of the same period last year.

The number of deals settled through cards, however, dropped to 17.98 million in the first quarter of the year amid virus-fuelled demand slump, compared to 23.95 million in 2019 during the period.

The drop in deals coincides with a decline in the value of transactions by 20 percent to Sh52.11 billion in March compared to Sh64.98 billion same month last year.

Similarly, the number of transactions in the month dropped to 5.69 million from 5.70 million and 6.59 million transactions recorded in February and January respectively, this also a drop from 7.82 million transactions in March 2019.

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The decline, especially in March came as businesses experienced some impact as the global coronavirus pandemic hit consumer demand, leading to low orders and operations scale-down.

The increased uncertainty as most people stayed at home led to a shift to buying essential requirements like groceries, food, toiletries, and medicines and less of electronics and household items.

The closure of restaurants and bars has also affected payment solutions.

As a result, the Stanbic Bank Kenya Purchasing Managers’ Index, which tracks private-sector activity fell to 34.8 in April from 37.5 in March from 49.0 in February.

The reduction in the transactions also follows government directives in response to the economic disruption from Covid-19 pandemic that may have significantly impacted the banks and mobile money agencies.

In mid-March, the CBK announced directives to promote digital transactions and adoption of the cashless mode of payment to curb the spread of the virus.

These include a waiver on mobile money fees of transactions of up to Sh1,000 and bank to mobile money wallet.

The banking regulator also allowed mobile money providers to increase transaction and wallet balance limits to Sh150,000 and Sh300,000 respectively, allowing businesses to accept large amounts and facilitate trade.

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