Capital Markets

M-Pesa, Airtel Money agents feel the heat of Covid-19 curb measures

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An M-Pesa agent. FILE PHOTO | NMG

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Summary

  • Digital Financial Services (DFS) agents are counting losses with earnings halving owing to measures put in place by the government discouraging handling of cash to stop the spread of Coronavirus.
  • A study by global consultancy MicroSave Consulting and Caribou Data conducted in March and April shows that most Kenyans have adhered to the measures, including use of digital money services and obeying curfew rules put in place in mid-March.
  • The study also shows the agents including those of M-Pesa and Airtel Money reported increased value of deposit transactions after the Central Bank of Kenya (CBK) directed lenders to triple the digital wallet limit to Sh300,000 and increase per transaction limit to Sh150,000 from Sh70,000.

Digital Financial Services (DFS) agents are counting losses with earnings halving owing to measures put in place by the government discouraging handling of cash to stop the spread of Coronavirus.

A study by global consultancy MicroSave Consulting and Caribou Data conducted in March and April shows that most Kenyans have adhered to the measures, including use of digital money services and obeying curfew rules put in place in mid-March.

The study also shows the agents including those of M-Pesa and Airtel Money reported increased value of deposit transactions after the Central Bank of Kenya (CBK) directed lenders to triple the digital wallet limit to Sh300,000 and increase per transaction limit to Sh150,000 from Sh70,000.

This, the report says, impacted agents ability to serve multiple clients due to ‘float’ capital shortage.

As a result of these directives, and others limiting business hours, DFS agents are counting their losses in several ways. Many agents have seen their transactions — and commissions — fall by more than half. In some cases, agents catering to customers at government institutions and business centres have had to close shop,” said the agents network in its Covid-19 report.

“A significant number of agents indicated that the (7pm to 5am) curfew impacted their prime business hours (usually 6pm — 11pm), and had negatively affected their business.

Many agents also reported redirecting their float investment to other businesses, or to stock up on provisions for their households fearing a lockdown.

President Uhuru Kenyatta asked Kenyans to make cashless transactions such as mobile money and credit cards to cut the risks of contracting the disease. He also urged telcos and banks to reduce the transaction costs.

Airtel Kenya waived transaction fees on its mobile money service across all bands while Safaricom only waived for transactions whose value is up to Sh1,000.

The CBK also reached a deal with banks to waive the charges for transfer from banks to money wallets starting Monday night until June 30 as part of measures meant to curb the spread of the coronavirus.

Cashless payments are expected to cut down the handling of cash and the risk of the virus being transmitted from person to person.