Safaricom takes battle to banks with new Sh500,000 M-Pesa limit

Customers receive M-Pesa services at a shop in Nairobi on July 13, 2022. [Elvis Ogina,Standard]

You will be able to transact and hold half a million shillings every day from Tuesday, August 15, in your M-Pesa account.

This is after Central Bank of Kenya (CBK) backed Safaricom's plan to increase M-Pesa account limits to Sh500,000, taking the telco's competition to the doorsteps of digital lenders, microfinance and commercial banks.

The new approvals effectively turn Safaricom into a mega digital bank that will take the war of banking services from traditional brick-and-mortar banking halls to customers’ phones.

The prospect of a digital bank is not new to Kenyans at a time most lenders have embraced online channels in a battle for survival. 

Safaricom's current limit per transaction of Sh150,000 will however remain, the company said. Even then, customers can make as many transactions up to the Sh500,000 daily limit.

The higher limits will allow individuals and businesses to operate their M-Pesa savings and business capital akin to a traditional bank account, enabling Safaricom to take the battle for digital transactions to commercial lenders.

Safaricom said the move is set to be a boost for businesses, especially SMEs, as the share of cashless transactions continues to rise. 

“The increased account limits will provide customers and especially small businesses with increased convenience as the share of cashless transactions continues to rise,” said Safaricom Chief Executive Peter Ndegwa in a statement. 

"We appreciate the role that Central Bank of Kenya has played by constantly providing guidance on innovations and protections that we have put in place to strengthen M-Pesa’s adherence  to Know Your Customer, anti-money laundering and other financial regulations and safeguards."

In the last financial year to March 2023, more than 606,000 businesses received payments through Lipa Na M-Pesa, with a total of Sh1.625 trillion transacted in the 12 months, said the telco.

Safaricom has been partnering with commercial lenders on a raft of products that allow banks to reach customers via phones.

M-Pesa transaction limits were previously increased in March 2020 when the CBK approved doubling of transaction limits to Sh150,000 and daily and account limits to Sh300,000.

M-Pesa was rolled out in March 2007 and banks had initially resisted the launch of the Safaricom platform.

Many lenders have since rolled out digital banking platforms, which have in turn cut the need for customers to visit brick-and-mortar outlets for services such as opening of accounts, balance inquiry and paying bills.

Safaricom has for long been experimenting with financial initiatives, including partnering with major local banks.

The telco has also widened the number of services it offers on the M-Pesa platform beyond personal cash transfers.

Merchant and utility payments have gone up, as has the usage of mobile platforms for taking loans from banks and also Safaricom’s own overdraft service, Fuliza.

M-Pesa accounts for about 99.9 per cent of the value of mobile money transactions, underlining the entrenchment of the platform in Kenya’s economy.

The National Treasury in earlier reports warned that any collapse of the M-Pesa service would cause widespread disruption in the economy.

This means M-Pesa is classified as a systemic risk to the country’s economy, underlining its crucial role.