Safaricom hits banks with new M-Pesa fees

Safaricom has announced a rate increase on bank to third party transfer services on its mobile money transfer services, citing the need to discourage customers over security concerns.

The enhanced rates will come to effect on December 1, 2015 with the firm hoping that bank customers would prefer withdrawing funds from their accounts to their phones, before transferring the same to the intended beneficiaries. “This new arrangement has to some level contributed to the raised risk profile of the bank to M-Pesa functionality especially in the case where a transaction was made under compromised or erroneous circumstances,” Safaricom has said.

It is anticipated that the higher rates could push banks to discontinue the transfer to third party functionality, but added that the period to end of November was meant to allow commercial banks time to seek approvals of the revised tariff from the industry regulator Central Bank of Kenya.

The mobile service provider promised to lower the rates applicable for the transfer from the bank account to the individual’s mobile wallet account. “In particular, there is a cause of concern where money is sent to a wrong M-Pesa account holder than was intended by a customer or where fraudulent transactions are made in favour of a third party M-Pesa account holder unknown to the customer,” it said further.

Such instances could happen when a bank customer is coerced to withdraw funds from their account in a kidnapping incident. However, from a revenues perspective, a direct transfer from a bank account to a third party would yield less than the two cash transfers, first from the bank to the M-Pesa and onward to the secondary party.

Safaricom also denies that the rate review had nothing to do with the entry of Equity Bank into the money transfer services through its platform called Equitel, contrary to public perception. Already, Equity has singled out the rate hike as a means to slow down its money transfer service and accused Safaricom of arbitrarily increasing the mobile money transfer rates charged to Equitel’s consumers transferring money to Safaricom’s M-Pesa service. Consumers of Equitel last week took to social media after finding out that the rates for sending money to M-Pesa had suddenly doubled without prior notice.

All partner banks

They ranted on social media platforms that the cost had risen on account of Safaricom increasing its termination rates stating that Equitel’s prices are capped at Sh27.50. Previously, Equitel to M-Pesa transfers were charged a uniform Sh33 per transaction.

This meant that Equitel to M-Pesa transfers were cheaper than M-Pesa to M-Pesa transfers for amounts above Sh1,500. This made Equitel a more attractive proposition, just as it looked to gain market share, especially from M-Pesa, a new higher tariff rates are now in operation.

Safaricom has said that the revised rates would apply to all partner banks, in disputing Equity’s claim.