Pain in the new year as banks reinstate mobile money fees

Central Bank of Kenya (CBK) Governor Patrick Njoroge. [Beverlyne Musili, Standard]

Kenyans will from the New Year spend more when transferring money from their bank accounts to mobile money wallets such as M-Pesa and Airtel Money.

This is after banks started effecting new levies following the reinstatement of the service charges by the Central Bank of Kenya (CBK) in early December.

"Dear Customer, following the press release by CBK, we wish to notify you that effective January 1, 2023, the bank will reinstate transaction charges between account and mobile money wallets. For more information visit our website," said Consolidated Bank in a notice to customers.

Another lender DTB also informed its customers of the reinstatement of the service charges.

To transfer any amount between Sh20,001 and Sh150,000, DTB said it will charge Sh70.

The return of the fees frozen over two years ago comes as fresh pain for consumers, but a major win for lenders who have witnessed a fall in fees and commissions.

Banks have been clamouring for the end of the freeze to rev up non-interest income.

While consumers have been enjoying the relief introduced in March 2020 to contain the spread of Covid-19 through cashless transactions, banks have been bleeding millions monthly due to the free transfers between them and wallets as Kenyans shunned bank branches and ATMs.

The new charges will come into force on January 1, 2023. [iStockphoto]

Commercial banks used to charge fees ranging from Sh30 to Sh197 before the waivers were introduced.

"The Central Bank of Kenya announces the reintroduction of charges for transactions between mobile money wallets and bank accounts, which were waived on March 16, 2020, as part of the emergency measures to facilitate the use of mobile money in the context of the Covid-19 pandemic," CBK said in a statement early December.

According to CBK data, the waiver saw the number of Kenyans actively using mobile money increase by over 6.2 million between March 2020 and October 2022.

It is also during the period that the monthly volume and value of P2P (peer-to-peer) transactions increased from 162 million transactions worth Sh234 billion to 440 million transactions worth Sh399 billion, an increase of 171 per cent and 71 per cent, respectively.

The monthly volume and value of transactions between payment service providers (PSPs) and banks within the two-year period increased from 18 million transactions worth Sh157 billion to over 113 million transactions worth Sh800 billion, an increase of 527 per cent and 410 per cent, respectively.

CBK, however, said the new charges that will come into force on January 1, 2023, are lower than those that applied before.

"The revised maximum charges for transfers from bank accounts to mobile money wallets will be reduced by on average up to 61 per cent, and mobile money wallet to bank account by on average up to 47 per cent," said CBK.