- Cross network money transfer charges are still high despite the industry enabling interoperability of mobile wallets in 2018.
- The cheque value as a share of GDP has also shrunk by over 100 per cent to 22 per cent last year compared to 57 per cent in 2010.
Kenya has unreasonably high transaction charges for digital payments, with some not understood by customers, the Central Bank of Kenya (CBK) has said.
Speaking during the launch of the National Payments Strategy 2022-2025, CBK governor Patrick Njoroge said the regulator will work with other stakeholders to roll out pricing principles to cushion consumers.
“While the recent improvements in various payments channels have been commendable, the same has not been reflected in terms of pricing of various payments services,’’ Njoroge said.
He added that lack of an effective and easy-to-access mechanism to address price-related complaints, particularly on digital channels, has undermined trust.
Consumers using digital wallets and mobile money continue to incur high transactional charges, especially for cross-network transfers, despite the industry enabling interoperability of mobile wallets in 2018.
For instance, it costs an average of between Sh10 and Sh300 for withdrawals of between Sh50 and Sh150,000 on Safaricom’s M-Pesa, which is Kenya’s leading mobile money platform with more than 90 per cent share of the mobile money market.
These charges are the equivalent of between 0.2 and 26.7 percent of the transacted cash, depending on the amount.
The cost of sending money to fellow registered users on the platform ranges from Sh6 to Sh105, charged on amounts between Sh100 and Sh150,000.
A sender can only transfer up to Sh35,000 to non-registered recipients on M-Pesa, with charges ranging from Sh45 to Sh309.
On the Airtel Money platform, withdrawal charges range from Sh9 to Sh270 for amounts between Sh50 and Sh150,000.
Sending money to fellow Airtel Money subscribers is free of charge, while transfer charges to other networks range between Sh6 and Sh105, for amounts of between Sh101 and Sh150,000.
Telkom’s T-Kash charges between Sh10 and Sh295 for withdrawals of between Sh50 and Sh150,000, while sending money to fellow registered users costs between Sh5 and Sh100.
Sending cash to non-registered users on the Telkom platform, capped at Sh35,000, costs between Sh36 and Sh285.
To curb the high transaction charges, CBK is planning to introduce Central bank digital currency (CBDC), a virtual currency that will be exchangeable on a one-to-one basis with physical cash.
It will work in a similar way to the existing mobile money product in the market but will mainly target cost reduction and easing transactions across different platforms.
Early this month, the regulator issued a discussion paper of CBDC for public participation.
Kenya is the global pioneer of mobile money transfer and has seen volumes since 2007.
The latest data by CBK shows Point of Sale Transactions have grown to 35 million from10 million in the past decade, with its value rising to close to Sh200 billion last year from Sh50 in 2010.
The data further shows that volumes of the bank to bank transactions have grown from 20 million in March 2019 to almost 700 million in November last year.
Furthermore, the volume of mobile money cash in and out transactions at agents has increased to two billion from less than 500 million in 2010.
The value of transactions hit Sh6 trillion last year.
The adoption of digital transactions has weighed down on traditional channels, with currency in circulation as a share of GDP dropping from 4.6 per cent 1in 2010 to 2.7 per cent last year.
The cheque value as a share of GDP has also shrunk by over 100 per cent to 22 per cent last year compared to 57 per cent in 2010.