CBK fees waiver pushes M-Pesa daily deals with banks to Sh15b

Central Bank building, Nairobi. [Wilberforce Okwiri, Standard]

The value of transactions between M-Pesa and banks has hit Sh5.58 trillion, thanks to fees waiver, even as  Safaricom and lenders rue lost revenue.

Safaricom disclosures show that total M-Pesa transactions in the year ended March 2022 grew 34 per cent to Sh29.55 trillion, with the value of transactions between M-Pesa and banks standing at 18.9 per cent or Sh5.58 trillion.

This means that Sh15.2 billion moves daily between banks and telcos, helped by the Central Bank of Kenya’s (CBK) move to waive fees for such transactions in mid-March 2020.

“M-Pesa wallet to bank and bank to M-Pesa wallet transactions continue to be free, and these account for 18.9 per cent of the total value of M-Pesa transactions and 3.2 per cent of total volumes,” said Safaricom.

The free transfers are costing telcos and banks money in terms of the foregone commissions, with Safaricom being forced to pay agents for handling more money.

Safaricom paid agents Sh32.54 billion, up from Sh28.21 billion in the previous period on the back of increased value of transactions, even as the volume of transactions rose by 29.8 per cent to Sh11.68 billion.

M-Pesa Africa managing director Sitoyo Lopokoiyit said the platform saw a significant jump in deposit volumes as customers used M-Pesa to deposit money they would have otherwise deposited directly to banks.

“Businesses that have collected cash would go to an agent, deposit that money, then send it to the bank because it is a free channel,” said Mr Lopokoiyit. “What this means is that agents around businesses are doing more transactions, which means more commission.”

Reinstatement of fees on transactions between banks and M-Pesa in the future looks set to increase M-Pesa’s contribution to Safaricom’s total revenue.

M-Pesa revenue grew 30.3 per cent to Sh107.7 billion in the review period to account for 36 per cent of the total revenue.

Number of agents

The surge in transactions between banks and M-Pesa came during the period the number of agents rose from 247,869 to 262,004.

Banks are also missing out on the commissions, with the likes of KCB and Equity having said they were in discussions with the CBK to reinstate the charges.

The lenders used to charge between Sh30 and Sh197 before the waivers were introduced in mid-March 2020 to lower the handling of cash so as to contain the spread of the Covid-19 virus.

The regulator rejected the push to reinstate fees on the transfer of cash between accounts and mobile phone wallets at the end of 2020 when it ended free M-Pesa transactions of up to Sh1,000.

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