Telecommunications giant; Safaricom and its biggest competitor in Kenya; Airtel, now charge significantly more for large monetary transfers from mobile money wallets to bank accounts.
Safaricom’s mobile money platform; M-Pesa and Airtel’s Airtel Money both have transaction charges that range from 0 Kenyan Shillings to as much as 105 Kenyan Shillings. This is quite high especially when compared to the fees charged by Banks which range from 0 Kenyan Shillings to 150,000 Kenyan Shillings.
Telecommunications companies are only the only ones in Kenya that charge users for moving money from their mobile money wallets to bank accounts. As it stands, a number of the telecommunications companies have more chargeable bands that make it possible for them to implement higher transaction costs for all amounts that are more than 30,000 Kenyan Shillings.
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Based on charges by a number of banks in Kenya including Equity Bank, KCB and NCBA, the highest transaction costs for bank to mobile money wallet transfers go from 65 Kenyan Shillings to 81 Kenyan Shillings. This is excluding taxes incurred for sending amounts between 20,000 Kenyan Shillings and 150,000 Kenyan Shillings.
For Safaricom, its M-Pesa transaction costs start from 87 Kenyan Shillings to 105 Kenyan Shillings across three categories with regards to sending 30,001 Kenyan Shillings to 150,000 Kenyan Shillings from your M-Pesa mobile money wallet to a bank account.
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For a user looking to transfer 30,001 Kenyan Shillings, 40,000 Kenyan Shillings and 150,000 from their M-Pesa mobile money wallet to a bank account said user will be charged 87 Kenyan Shillings, 96 Kenyan Shillings, and 105 Kenyan Shillings.
For the transfer of the same or similar amounts from a bank account to an M-Pesa mobile money wallet a user would be charged transaction costs that range from 65 Kenyan Shillings to 81 Kenyan Shillings excluding tax.
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For Airtel Money its exact transaction fees are not quite public. However, its charges are somewhat similar to those on the M-Pesa mobile wallet service. For example, Airtel Money charges 45 Kenyan Shillings for the transfer of 9,500 Kenyan Shillings from its mobile money wallet to a bank account. M-Pesa on the other hand charges 46 Kenyan Shillings for mobile money wallet to bank account transfers involving similar amounts.
While mobile money services in Kenya charge more fees for transactions from their numerous platforms, they also generate substantial revenue from bank transfers to their mobile money wallets.
M-Pesa collects charges a fee of between 5 Kenyan Shillings and 10 Kenyan Shillings on bank accounts to mobile money transactions while Safaricom has a tariff that is more diverse and between 4 Kenyan Shillings and 12 Kenyan Shillings.
For 100 Kenyan Shillings and below transactions however, users enjoy zero transaction costs across board.
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As part of the agreement reached with the Central Bank of Kenya (CBK) banks and telecommunications companies in the country were instructed to reduce their transaction charges by 6.1 percent so as to be allowed to reimplement fees on transactions at the start of this year; 2023.
Back in March of 2020 fees for transactions were suspended in a move that was aimed at encouraging citizens in Kenya to adopt cashless or mobile transactions during the onset of the Coronavirus (COVID-19) pandemic.
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The decision also provided households with some level of relief with regards to finances and their overall spending power.
The new charges are significantly lower than before and are returning at a time when mobile money transfer use continues to achieve year on year growth.
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According to the Central Bank of Kenya (CBK) the number of mobile money users in Kenya rose by over 6.2 million between March 2020 and October 2022.
The value of person to person transactions and monthly volume increased from 162 million which is worth 234 billion Kenyan Shillings to 440 million which is worth 399 billion Kenyan Shillings showing growth increases of 171 percent and 71 percent respectively.
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The Central Bank of Kenya (CBK) stated that, “The monthly volume and value of transactions between payment service providers and banks increased from 18 million transactions worth about Sh157 billion, to over 113 million transactions worth Sh800 billion, an increase of 527 percent and 410 percent, respectively.”
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