END OF HOLIDAY

CBK reinstates Sacco transaction charges

It said other measures on waiver of charges between mobile money wallets and bank accounts remained in force.

In Summary
  • This ends a year-long waiver announced as part of Covid-19 relief measures
  • Co-op Bank will now be charging Sh20 for transactions between Sh101-500 and up to Sh50 for those transacting above Sh30,000 to a limit of Sh70,000. 
CBK Headquarters
CBK Headquarters
Image: FILE

Savings and Credit Societies (Saccos) will now have to pay service providers for mobile banking support for  amounts more than Sh100, the Central Bank of Kenya announced yesterday.

The banking sector regulator said the waiver of charges would make the services unsustainable due to infrastructure and related costs since it is supported by third party ICT service providers.

The tariff is expected to support further roll-out of mobile banking to a larger number of Saccos, with a view to further enhancing cash-lite transactions  in line with the Covid-19 protocols that discourage use of cash.

Subsequent to CBK's statement, Co-operative Bank announced new subsidised charges for transactions above Sh100 effected via its in house mobile money wallet in line with the directive. 

This, it said will help the 15 million-member Co-operative Movement mitigate the economic ravages of Covid-19 pandemic. 

Lenders have two modes of  mobile banking wallets. In the first model, banks partner with payment service providers to utilise their mobile money wallets to provide a variety of transactions through customers’ bank accounts.

In the second model, banks invest directly in their own in-house mobile banking wallets to facilitate mobile money and other wallet based financial services.

Co-op Bank will now be charging Sh20 for transactions between Sh101-500 and up to Sh50 for those transacting above Sh30,000 to a limit of Sh70,000. 

''The new  Mcoop cash charges are heavily subsidised to ensure enhanced value to customers and Saccos that have implemented the digital platform countrywide,'' the lender said in a statement. 

CBK on Thursday said the resumption of charges after a year long waiver applies to in-house mobile money wallets that are closely linked to the Sacco sector.

CBK said  the Sacco sector is deeply integrated to these wallets and accounts for a significant share of their transactions.

''A recurring concern has been that the viability of these services may be adversely affected in the current price regime, given the inability to cover the underlying costs,” the regulator said..

It said there is a significant risk for Saccos and their extensive membership due to the lack of other alternatives to connect to the mobile money ecosystem.

The resumption of charges is expected to provide space to increase the connection options for Saccos and will be subject to review by CBK against the pricing principles announced on December 17, 2020.

It touches on  customer centricity, transparency and disclosure, fairness and equity, choice and competition and affordability.

The principles were introduced on the expiry of the emergency measures waiving charges for low value mobile money person to person and on transactions below Sh1,000.

CBK said other measures on waiver of charges between mobile money wallets and bank accounts remained in force.

It said  it will continue to monitor developments and support the growth of the payments ecosystem to ensure choice, competition and affordability.