CBK announces return of bank-to-mobile money transfer charges

Central Bank of Kenya Governor Dr. Patrick Njoroge at Parliament, Nairobi. [Elvis Ogina, Standard]

The Central Bank of Kenya (CBK) has announced the return of charges on transactions between mobile money and bank accounts starting January 1, 2023.

The charges were suspended on March 16, 2020, three days after the Covid-19 pandemic was declared in the country.

The waiving of the fees was to encourage the non-physical exchange of cash during payments in efforts to contain the spread of the contagious Covid-19.

On Tuesday, December 6, the CBK announced the reinstatement of bank-to-mobile wallet transfer fees, though slashing the charges by half.

“The resumption of revised charges is aimed at building on the gains on the financial system, facilitate a transition towards sustainable growth of the mobile money ecosystem, and ensuring affordability of payment services for Kenyans,” the CBK said.

What the new charges will look like

According to CBK, transfers from bank accounts to mobile money will be reduced by up to 61 per cent, while transactions from mobile money wallets to bank accounts will be lowered by up to 47 per cent.

Transactions for PayBills (used by businesses, companies, and institutions to pay and collect funds) will be halved by 50 per cent.

Charges for bank accounts to mobile money will also be reduced by 45 per cent.

“The revised charges for bank-to-wallet and wallet-to-bank transactions will be announced by respective Payment Service Providers (PSPs) and banks, and will be effective from January 1, 2023,” the CBK stated in its Tuesday notice.

The regulator said the number of mobile money users in Kenya increased by more than 6.2 million people between March 2020 and October 2022.

“The monthly volume and value of transactions between PSPs and banks increased from 18 million transactions – worth about Sh157 billion –  to over 113 million transactions; worth Sh800 billion.”

This represented a 527 per cent increase, informing the decision to return mobile money to bank transaction charges, said the CBK.

Telecommunications company Safaricom has been in talks with the CBK to reinstate the cross-platform money transfer charges.

M-Pesa, a critical revenue stream for Safaricom, contributes about 45 per cent of its revenue.

Several banks reported a drop in non-funded income in 2020, which includes fees and commissions, owing to the free bank-to-wallet transfers.