Why court dismissed suit on Lipa na M-Pesa fees legality

Mr Wafula sued Safaricom complaining that the charges imposed on pay bill service and used by the government, parastatals, and other private organisations in the payment of the services, were unconstitutional.

“In my view, the nature and scope of the dispute perfectly falls within the competence of the Communications Authority of Kenya. There is an appellate machinery whereby if dissatisfied, the petitioner can lodge an appeal to the Appeals Tribunal established under the Kenya Information and Communications Act (KICA),” said the judge.

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Justice Mugambi added that although Mr Wafula argued that the mechanisms provided by KICA were inadequate, he was not persuaded that it is not beyond the reach of the CA to adequately determine and provide sufficient remedies, if need be.

Mr Wafula argued that Safaricom had not indicated whether transaction costs were arrived at after consultation with affected parties and that the public was never accorded an opportunity to choose an applicable tariff.

Safaricom opposed the case arguing that the terms and conditions for the Lipa na M-Pesa are approved by the CA for the various products and services it provides to its customers based on the Standard Subscriber Service Agreements under the Kenya Information and Communications (Consumer Protection) Regulations.

The telco said Mpesa and Lipa na Mpesa services are voluntary and a subscriber who elects to use the services must comply with the terms.

Lipa na M-Pesa is a form of cashless payment option for goods and services and is also used for payment of salaries, bills, merchant payment collection services, retail distribution, bulk payment, and transport solutions.

Mr Wafula said the product was presented as being cost-effective for users and it included two different options - Buy Goods and the Pay Bill options.

Whereas the Buy Goods option was free to end customers, the Pay Bill has costs attached to it in the form of transaction fees.

He said the M-Pesa product amounts to a double charge against the public who are already being charged for the services rendered by the businesses or government and again being charged for the services of the agent, Safaricom.

Mr Wafula said there was no justification why the choice to use either the Pay Bill or the Buy Goods option should not be left to the customer as the latter is cost-free considering that Safaricom has limited the Pay Bill option as the only way to pay for essential services such as those at the Attorney General’s Office, Huduma Centres, court filing fees, electricity Bills and National Transport and Safety Authority (NTSA) services.

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The petitioner had proposed that the Buy Goods option should be used in these services at no extra charge to the consumers.

Additionally, Mr Wafula said Safaricom should be restrained from allowing their primary client the discretion to elect who should bear the costs of the transactions as it is ultimately citizens who are made to bear the burden, yet they are not a party to such contract.

Mr Wafula accused government agencies of abandoning their regulatory duties leading to the violation of the rights of the end customers.

Safaricom also submitted that the case was premature and that there exists an effective dispute resolution procedure under KICA to deal with such disputes.

The telco added that the Tariff Regulations allow a licensee to set tariffs that are just and reasonable, which must be sufficiently clear to enable the end-user to determine the description of the service, the details relating to the nature of service, and charges payable for the service.

CA also opposed the suit saying Mr Wafula had not exhausted all the mechanisms set out under the Competition Act.

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