Mobile payments hit new high as cards usage drop

Mobile wallet is growing at the expense of credit cards, with lenders saying it has since edged out traditional means of banking as a favourable means of transaction in Kenya.

Kevin Ayugi, Family Bank’s Chief Digital Officer, said proliferation of smartphones and digital money is reducing the footfalls towards Automated Teller Machine (ATM) touch points, requiring vendors to be innovative to stall the process.

“Cash remains the preferred mode of payment in settlement of everyday transactions in the country and as such ATMs have been and will continue to play an important role as a core customer touch point” he said.

However, Ayugi added, with the proliferation of smart phones and digital money the reliance on ATMs usage will continue to drop unless the vendors can improve their utility beyond cash dispensing.

While acknowledging that the disruption was real, Victor Odada, Stanbic Bank’s Head of Digital Banking and ecommerce said it is a matter of perspective when it comes to card- debit/credit- which has also evolved as a channel.

“From a bank’s perspective,the card or mobile money are just but channels that allow our customers interact with the bank,” he said. 

Odada added that a very large percentage of mobile money inflows into the wallets always come from a bank account in one form or the other, signifying the silent symbiotic relationship.

Ayugi said though bank’s initially took a hit on their non-funded income (NFI) lines, they quickly recovered upon realisation of opportunities to partner and cooperate, as opposed to viewing digital money as a competitor.

“As a result, most banks have now included digital money as part of the products on offer on most of their customer touch points, as such increasing customer convenience while still earning a commission from the various partners,” he said.

Covid-19 pandemic

Central Bank of Kenya data shows that in 2020, net earnings by top lenders in the country dropped by $11.55 million (Sh1.24 billion) between March and November, attributed to a rise in use of mobile money, as opposed to cards as a means of payment.

The uptake in use of the mobile wallet was fuelled by the Covid-19 pandemic, with authorities encouraging use of mobile money as part of efforts to contain the spread of the virus.

The intervening period saw CBK abolish charges on transfer of money from customers’ bank accounts to mobile money wallets and vice versa, further entrenching the service amongst Kenyans.

Reflection of increased usage of mobile money by Kenyans was also captured by the Communication Authority of Kenya (CA), in its first quarter 2021 statistics report indicating the value of mobile money transactions across all networks totalled Sh1.9 trillion.

Further indication of Kenyans preference for the mobile wallet was underscored on Monday when CBK released Mobile Money statistics indicating that despite removal of Covid-19 related subsidies, mobile money transactions is set to hit a historic high after users moved ($55 billion) Sh6.24 trillion between January and November 2021.