Since 1902

By John Njiraini

Telecom operators offering mobile money transfer services have been told to bring down transaction charges or risk the wrath of the Central Bank of Kenya (CBK).

CBK Governor Prof Njuguna Ndung’u said service providers are yet to reduce transaction costs despite being allowed to increase the amount that can be transferred using the mobile phone from Sh35,000 to Sh70,000 per transaction.

"One of the pre-conditions for us to allow service providers to double the limit was for them to bring down the transaction costs," said Ndung’u.

He added that operators must bring down the charges and prominently display them for clients using the services.

Central Bank of Kenya. The regulator has asked mobile money transfer service providers to reduce transaction costs. [PHOTO: Jenipher Wachie / Standard]

Although CBK allowed service providers to increase the upper limit per transaction to Sh70,000 early December last year, the operators are yet to bring down transaction charges.

The electronic money transfer services include M-Pesa by Safaricom, Zap by Airtel Kenya, Yu Money by Yu and Orange Money by Telkom Orange.

Currently, customers are charged an average of Sh35 for transferring between Sh100 and Sh35,000 on the M-Pesa platform. According to Safaricom, Sh2.5 billion is transferred through M-Pesa every month.

Huge success

Ndung’u said electronic money transfer has recorded significant success in netting more Kenyans to the formal financial sector considering the increase in the number of people using the services, the wide network of agents and increase in transfers.

When M-Pesa was launched in 2007, the average transfer was Sh3,500 while the average deposit was Sh250. He added the CBK expects to replicate the success with the agency banking model that is currently being rolled out in collaboration with commercial banks.

"We are prescribing the rules of the game on agency banking and the agents must go through massive training and surveillance," said Prof Ndung’u.

Since agency banking, or banks using third party to offer services became operational on May 1 last year, six banks have applied to CBK for agent network approval.

As at September 30 last year, the CBK had approved 5,892 agents of which 4,392 were telecom-related businesses and 1,500 in other enterprises.