Eyes on CBK as free M-Pesa transfers lapse

The waiver on mobile money transaction fees under Sh1,000 has lapsed, turning the spotlight on the Central Bank of Kenya (CBK) which had pushed banks and telcos to adjust prices because of the economic slowdown caused by the global Coronavirus pandemic.

The 90-day deal with the government lapsed last week and Safaricom #ticker:SCOM, which owns M-Pesa, says it is awaiting direction from CBK on the free services, which has seen the Nairobi bourse listed company lose an average of Sh1.7 billion monthly since mid-March.

The waiver, which involved telcos and other firms involved in mobile money transfers, was aimed at cutting down on the handling of cash and the attendant risk of Covid-19 being transmitted from person to person.

Commercial banks also removed charges for customers moving money between their mobile wallets and bank accounts with the free service set to end on June 30.

While Safaricom reckons that the banking regulator will determine the fate of the free service, lenders through their lobby group — the Kenya Bankers Association (KBA) — say their members will decide on the free offer.

“We are still waiting for a response from the Central Bank, we do not know if they intend to extend,” Safaricom said.

KBA said the banking industry will make a decision on the adjusted rates before the end of the month.

“Different stakeholders had different timelines. For IPSL (Integrated Payment Service Limited or PesaLink) it takes effect up to June 30, then we shall have discussions on how to proceed whether it remains the same or we make adjustments,” KBA chief executive Habil Olaka told the Business Daily in an interview. “You know it was more of a moral appeal to institutions to support the government initiative to accommodate those affected”.

CBK did not respond to the Business Daily’s questions on the fees waiver.

But data from the regulator shows that the daily average mobile phone money transactions of less than Sh1,000 grew 83 percent to Sh1.98 billion daily between April 20 and May 10 when compared to the days before March 16—just four days after Kenya announced its first positive Covid-19 case.

However, the growth was counterbalanced by the decline in mobile transactions of more than Sh1,000, which dropped 18.4 percent to Sh5.6 billion daily in a period when most companies have cut down their activities, shed jobs and placed workers on unpaid leave in response to the pandemic.

Kenya, which has reported 4, 478 cases of Covid-19 and 121 deaths, expects the infectious disease to peak in September.

CBK did not provide data on how individual telcos handled the mobile money, but Communications Authority of Kenya (CA) figures show that Safaricom via M-Pesa controlled 99.9 percent of the cash transfers in the quarter to December.

Airtel and Telkom Kenya held less than 0.1 percent mobile phone cash transfers.

Safaricom on April 20 said it would take a Sh5.5 billion hit on its M-Pesa revenue in the three months from mid-March after it waived transaction fees on mobile money transfers under Sh1,000.

The waiver was part of the quest for cashless payments to curb the spread of the disease.

The foregone revenue is equivalent to 6.5 percent of M-Pesa’s annual sales.

In the financial year that ended in March, M-Pesa accounted for about a third of Safaricom’s Sh251.2 billion revenue.