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Agency probes claims of bias in bank-mobile fees

BUSINESS
By Moses Michira | May 31st 2016 | 2 min read
By Moses Michira | May 31st 2016
BUSINESS

The Competition Authority of Kenya (CAK) is investigating the pricing of bank-to-mobile-money services to find possible restrictive practices.

A South African firm is nearly completing the probe, which has so far yielded “strong pointers” to anti-competition tendencies.

Gideon Mokaya, the enforcement and compliance manager at CAK, told The Standard at an ongoing workshop that there is already some evidence of unfair pricing.

“The study... is nearly complete, but it is clear to us there are uncompetitive practices,” he said.

Banks or mobile money service providers found to be engaging in restrictive trading will face sanctions, which include penalties or stop orders.

At the heart of the complaints that led to the probe is that bank customers are charged different prices to transfer money from their accounts to their mobile wallets.

Amounts involved in these transactions are large, considering that bank-to-mobile services are heavily utilised by customers who would rather withdraw their cash directly to their phones, rather than through Automated Teller Machines (ATMs).

Additional convenience

The additional convenience brought about by the availability of mobile money agents has endeared the service to bank customers, even though it is often more expensive than withdrawing from an ATM.

CAK took up the matter and commissioned the investigation to determine the pricing schedules and the costs incurred by various mobile service providers to arrive at the effective charges levied on customer transactions.

Some banks have claimed that their rivals’ customers are charged lower transaction fees for withdrawals from their accounts to mobile wallets. Should CAK confirm the pricing among banks for similar services is discriminatory, then mobile service providers could be directed to revise their tariff schedules.

The investigation could be one of the highest-profile to be conducted by the authority, which is now seeking to raise the penalties for companies engaging in anti-competitive practices to up to 10 per cent of revenues.

Draft regulations allowing for the steeper penalties have been submitted to the National Treasury, which is the CAK’s parent ministry, before the proposed amendments are taken to Parliament for possible enactment.

Last year, CAK collectively fined two firms Sh17 million for engaging in restrictive market strategies.

Nine outdoor advertising firms that own billboard sites were further fined Sh14.5 million for fixing the pricing of large-format posters.

CAK is also launching an investigation into claims of price fixing at the coffee exchange, where farmers are thought to have lost billions of shillings in foregone revenues, as cartels artificially depress the prices of beans.

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