The Central Bank of Kenya (CBK) has revealed that it will be putting back the charges on monetary transactions between mobile money wallets and bank accounts. It is believed that the decision was made in a bid to provide some form of succour for and to commercial banks who have in recent times, expressed their displeasure of the Central Bank of Kenya (CBK)’s disinclination to bring back said fees.
On the 16th of March of 2020, the Central Bank of Kenya (CBK) removed the fees as one of the emergency strategies put in place to further encourage the mass adoption mobile money wallets at a time when the Coronavirus (Covid-19) pandemic.
A notice released by the Central Bank of Kenya (CBK) on Tuesday the 6th of December 2022 revealed that the reimplemented charges will be fully reinstated on the 1st of January 2023 and will be significantly lower than the charges which in place prior.
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According to the Central Bank of Kenya (CBK), “The revised maximum charges for transfers from bank accounts to mobile money wallets will be reduced by on average up to 61 percent, and mobile money wallet to bank account by on average up to 47 percent.”
The Central Bank of Kenya (CBK) added that, “Tariffs for paybills that are used to collect and disburse funds by businesses, companies and institutions will be reduced on average 50 percent while charges levied by banks for banks to mobile money transactions will be reduced by on average 45 percent.”
As a result, all banks and payment service providers that are affected, will be announcing their new transaction fees and costs before the 1st of January 2023.
The Central Bank of Kenya (CBK) stated that the transaction fee waiver contributed to the significant growth in the payments sector in Kenya. According to the regulator, from March of 2020 to October of 2022 the total number of individuals using mobile money platforms and services in Kenya, grew by more than 6.2 million.
The Central Bank of Kenya (CBK) added that during the same period, the overall value of peer to peer transactions and volume monthly grew from 234 billion Kenyan Shillings which translates to 162 million transactions, to 399 billion Kenyan Shillings which translates to 440 million transactions, indicating gro/wth rates of 71 percent and 171 percent respectively.
In addition, the value of transactions between banks and payment service providers as well as the monthly volume grew to 800 billion Kenyan Shillings from a total of 113 million transactions. This is significantly higher than the 157 billion Kenyan Shillings from a total of 18 million transactions that was achieved previously, and shows growth of four times and five times respectively.
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According to the Central Bank of Kenya (CBK), “The resumption of revised charges is aimed at building on these gains, facilitating a transition towards sustainable growth of mobile money ecosystem and ensuring affordability of payment services for Kenyans.”
Commercial banks operating in Kenya have since 2021, voiced their concerned to the Central Bank of Kenya (CBK) over the transaction fees still not being put back in place especially at a time when they (the banks) have had to increase their investments in the digital technology sector to be able to effectively cater to the growing transactions carried out by their customers.
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Before the transaction fee waivers were put in place banks in Kenya charged anything from 30 Kenyan Shillings to 197 Kenyan Shillings per transaction. Despite mounting pressure, the Central Bank of Kenya (CBK) opted to no put back that transaction fees in 2020 even after it stopped free transactions for sums of up to 1,000 Kenyan Shillings.
Commercial banks in Kenya made it known during their lobbying efforts, that millions of Kenyan Shillings have been lost every month as a result of the free transfers between bank accounts owned by the customers and mobile money wallets.
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The banks added that putting back the transaction fees will make the situation fair between micro lenders, telecommunication companies, and commercial banks.
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