Survey: Nearly half of mobile money users have lost cash

Report points to the rising vulnerabilities of people carrying out digital transactions. [Courtesy]

Nearly half of the country’s mobile money account users have lost cash this year according to a Central Bank of Kenya (CBK) survey. The report points to rising vulnerabilities of digital transactions.

The survey, jointly undertaken by FSD Kenya and Kenya National Bureau of Statistics show that 47.4 per cent of people holding mobile money accounts such as M-Pesa lost money this year — a steep rise from 8.4 per cent two years ago.

The findings, contained in the 2021 FinAccess Household Survey that track access, usage, quality and impact of financial inclusion come on the back of increased digital transactions in the Covid period.

The report did not disclose how much money the mobile account holders lost but points to the rising vulnerabilities of people carrying out digital transactions.

“Respondents who reported to have experienced loss of money increased in 2021 compared to 2019. This may partly be due to increased use of mobile money during the period,” said the report. “Among the mobile money users that reported to have faced the risk of losing money, 71.4 per cent indicated sending money to wrong number as the key.”

This could mean that Section 35 of the Computer Misuse and Cybercrimes Act 2018 that criminalises refusal to reverse erroneous digital transactions such as M-Pesa and Airtel Money has not been effective.

“A person who intentionally hides or detains any electronic mail, message, electronic payment, credit and debit card which was found by the person or delivered to the person in error and which ought to be delivered to another person, commits an offence and is liable on conviction a fine not exceeding Sh200,000 or imprisonment for a term not exceeding two years or to both,” states the Act.

The survey had shown 33.7 per cent of respondents were unable to correctly read a typical text message showing the transaction value and associated costs.

CBK data to October showed mobile money agents handled Sh5.64 trillion in the 10 months, translating to a 38 per cent jump from the preceding similar period.

The latest jump is the fastest January-October rise since 2011 when the value of transactions rose by 60 per cent to Sh938 billion. At 47.4 per cent, mobile money topped the list of financial service products where users were likely to lose money.

Saccos followed with 15.6 per cent of users reporting to have lost money. This was followed by mobile banking (11.5 per cent), microfinance institutions (10.6 per cent), banks (10.5 per cent), informal groups (7.9 per cent) and mobile loan apps (1.1 per cent).

A financial Sector Stability Report released early this year showed Saccos lost Sh106 million in 17 months to March this year due to cyber theft amid increased mobile banking.

Mobile phones are the weak link in financial sector fraud, with respondents citing hoax phone calls or text messages, and cybercrime as among the incidences used by fraudsters. “Among bank account users, fraud was the main risk identified, with 34.5 per cent of respondents indicating that such crimes were internal fraud and 25.9 per cent perpetuated by phone fraud,” said the survey.

CBK governor Patrick Njoroge has in the past urged banks to tighten due diligence checks on staff and providers of services such as IT systems to lower the risk of fraud.

Fraud was listed among the consumer protections concerns cited in the survey that showed 83.7 per cent of Kenyans now have access to one or more financial service products - up from 26.7 per cent in 2006.