Safaricom cuts fees on low value M-Pesa transactions
Safaricom’s mobile money service M-Pesa handled about 92 per cent of cash sent by Kenyans in the diaspora in the year to March.
What you need to know:
- It cut the cost of sending money for transactions below Sh15,000 but failed to comment on withdrawal charges.
- Safaricom said the Sh9 billion six-month hit saw the firm report a six per cent drop in net profit to Sh33.07 billion—the first fall in nine years.
Safaricom has cut low value M-Pesa transaction fees by up to 45 per cent in line with a deal agreed with the Central Bank of Kenya (CBK) that ended free mobile phone money transactions of up to Sh1,000.
It will now cost Sh6 to send between Sh101 and Sh500, down from Sh11. Transactions of between Sh1,501 and Sh2,500 will cost Sh32, down from Sh41.
The telco is betting on volumes to cover for the low fees after the waiver of charges on M-Pesa transactions cost telecommunications firm Sh9 billion in the six months to June.
CBK rejected bankers’ push to reinstate fees on transfer of cash between accounts and mobile phone wallets, even as it ended free M-Pesa transactions.
Withdrawal charges.
"As guided by the Central Bank of Kenya and taking into account the Principles on the Pricing of Mobile Money Services, we have taken the decision to reduce our M-Pesa tariffs by up to 45 per cent for lower value transaction bands," said Safaricom CEO Peter Ndegwa.
It cut the cost of sending money for transactions below Sh15,000 but failed to comment on withdrawal charges.
The reliefs on mobile phone payments were introduced from March 16 to encourage cashless payments on mobile phones as part of efforts to contain the spread of the coronavirus.
CBK said that since the waiver was introduced the monthly volume of person-to-person transactions increased by 87 per cent between February and October.
Significant growth
Over this period the volume of transactions below Sh1,000 increased by 114 percent, while 2.8 million additional customers are using mobile money. Business-related transactions also recorded significant growth over the same period.
Safaricom said the Sh9 billion six-month hit saw the firm report a six per cent drop in net profit to Sh33.07 billion—the first fall in nine years.
At Sh9 billion, the estimated revenue loss is equivalent to 25 per cent of the Sh35.88 billion Safaricom made from the M-Pesa platform in the six months to September and 7.2 percent of total revenue in the same period.
Safaricom said the new cheaper fees will cover 90 per cent of transactions. All transactions of Sh100 and below will remain free and all M-Pesa customers will continue to enjoy free transactions between M-Pesa and bank accounts.
