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Herald Aloo

Central Bank of Kenya (CBK) has urged digital payment service providers to cut their prices as part of Covid-19 support measures, arguing that they are best placed to pass the benefits of digitised payments to consumers.

In the wake of Covid, internet-based payment and mobile money has been pivotal in the transition to cashless transactions but are relatively expensive compared to traditional banking systems.

Although transaction fees across digital payment slightly dropped, the regulator believes further cuts are still necessary for inclusivity during economic recovery.

“Prices and tariffs of some payment services can be high in relative terms, while others are not easily understood by the average customer.

Further, where institutions utilise payments, services are availed to end-customers with multiple charges,” CBK said in its 2022-2025 National Payments Strategy.

Covid-19 peak

Safaricom’s M-Pesa platform, which has the largest market share in mobile money categories, trimmed transfer charges by up to 45 per cent for low value transactions, leading to additional 2.8 million customers beginning to use mobile-money services during Covid-19 peak. 

The telco operator consequently experienced 75 per cent increase of merchant tills and 43 per cent surge in the number of active lipa na M-pesa agents between 2020 and 2021.

But upon the end of waiver, charges gradually shot up as the telco claimed dented earnings. Central Bank is, however, determined to ride on the cashless economy that has greatly taken shape. 

It said the inability to put in place effective and easy-to-access mechanisms to address price related complaints, particularly on digital channels, has undermined trust. 

“CBK is determined, working with the industry, to change this reality and ensure that benefits of digitalisation translate to affordable, transparent and customer-centric payment services” the strategy paper stated.

Since the majority of digital payment platforms users are low income households, CBK wants a robust pricing principle implemented to ensure greater economic inclusivity that does not hurt the providers too.