Safaricom effects higher M-Pesa charges

By Macharia Kamau

M-Pesa customers have started paying more to send or withdraw money on the money transfer system. This is after Safaricom revised its tariffs.

The company had said last week it would increase the cost of M-Pesa transactions.

It said the increase was necessitated by a move by the Ministry of Finance to impose a 10 per cent excise duty on money transfer charges.

The telecom firm affirmed it could not absorb the new tax, and yesterday, started charging the new rates that are 10 per cent higher.

Sending or withdrawing Sh500 on M-Pesa will now cost Sh27 per transaction up from Sh25. A user sending Sh5,000 will be charged Sh33 up from Sh30. It will cost Sh66 to withdraw the same amount from any M-Pesa point.

The amendment to the Customs and Excise Duty Act contained in the Finance Bill 2012 was gazetted last week, amid protests from the industry. The GSM Association – a global body representing mobile operator interests – late last year said the move would stifle a nascent and important driver of commerce and socio-economic development

Excise duty has been referred to as sin tax as it is ordinarily imposed on non-essentials or luxurious goods and services.

There are over 19 million mobile money transfer customers that have used it as an essential service.

In a statement last week, the Company said its M-Pesa tariff structure is guided by the needs to sustain the uptake of mobile money and support re-investments.

“We appreciate the need to support the Government, as it seeks to reach its financial obligations. However, we maintain that a tax on mobile money is at that this time premature. It is likely to have a negative impact on the country’s financial deepening agenda,” said Bob Collymore chief executive Safaricom in the statement.

“It will create an unnecessary barrier for wananchi who are in need of basic financial services.” Mickael Ghossein Telkom Kenya (Orange) chief executive said the firm is still studying the implications of the new tax measure.

“In principle, the excise increase will affect our customers, as the business will have to pass on the cost. We are assessing our Orange Money pricing strategy in an effort to minimise impact on our customers,” he said.

“However, an increase in excise on mobile money transfer services will undermine continued uptake of the services.

More than 30 per cent of Kenyans are still unbanked and rely on mobile money services as a store of value, in addition to its core purpose of sending and receiving money.”

Airtel and yuCash Money do not charge on their money transfer platforms. Airtel charges between Sh15 and Sh300 to withdraw money from its agents, with Sh70 000 as the limit, customers on yuCash pay an average fee of Sh40 to withdraw money.

Mobile phone operators already pay a 16 per cent value added tax and 10 per cent excise duty on voice calls. Treasury introduced excise duty on all money transfer systems to increase revenue collections and cater for pay increases among civil servants, especially teachers.

The hike is expected to affect banks and other financial services providers.