Kenya’s digital payments market has entered a new phase after 19 banks rolled out sharply reduced PesaLink transfer charges, setting up one of the strongest challenges yet to Safaricom’s M-Pesa, the country’s dominant mobile money platform.

The coordinated fee cuts have reignited a question many Kenyans are now asking: Which platform is actually cheaper in 2026 – PesaLink or M-Pesa?

The answer depends on how much money you’re sending, who you’re sending it to, and whether you’re using a bank account or a mobile wallet.

What changed?

The latest changes saw participating banks introduce a simplified pricing structure under the “Tuma Direct na Mbao” campaign. Customers now enjoy FREE transfers for amounts up to Ksh1,000, and flat Ksh20 for transfers between Ksh1,001 and Ksh999,999.

The move replaces the previous tiered pricing model that could cost customers up to Ksh250 depending on the transaction value. The discounted rates are now available across 19 participating banks and microfinance banks, nearly double the number that had adopted the model just two months ago.

How does that compare with M-Pesa?

M-Pesa continues to use its traditional tiered pricing model for wallet-to-wallet transfers.

According to the latest tariffs, transfers up to Ksh100 remain free. Transfers between Ksh101 and Ksh500 cost Ksh7. Sending Ksh501 to Ksh1,000 attracts a fee of Ksh33.

Charges then increase progressively with transaction value, reaching Ksh108 for transfers of Ksh250,000, the maximum amount allowed in a single M-Pesa transfer.

So which one is cheaper?

For small transfers (Below Ksh100)

Both services now offer free transfers for the smallest transactions.

For transfers between Ksh101 and Ksh500

M-Pesa charges only Ksh7, while PesaLink becomes completely free only if the sending bank has adopted the new pricing and the transfer falls within the free Ksh1,000 threshold. For customers whose banks participate, however, PesaLink also becomes free, effectively matching or beating M-Pesa.

For transfers between Ksh501 and Ksh1,000

Here, PesaLink wins. This is where the biggest difference emerges.

A customer sending Ksh1,000 via M-Pesa pays Ksh33, while participating banks now process the same transfer through PesaLink free of charge.

For transfers above Ksh1,000

Here, PesaLink wins. Under the new model, almost every transfer above Ksh1,000 costs only Ksh20, regardless of whether the customer is sending Ksh2,000, Ksh50,000 or Ksh500,000.

M-Pesa charges continue increasing with the amount transferred, making PesaLink significantly cheaper for medium- and high-value transactions.

Why banks are cutting prices

For years, commercial banks have watched M-Pesa dominate Kenya’s person-to-person payments market thanks to its convenience, vast agent network and strong customer loyalty.

PesaLink, operated by Integrated Payment Services Limited (IPSL) under the Kenya Bankers Association, allows customers to move money instantly from one bank account to another without routing the funds through a mobile wallet.

Banks believe lowering fees will encourage more customers to keep transactions within the banking ecosystem instead of transferring money into M-Pesa wallets first.

But M-Pesa still has major advantages

Despite the lower bank charges, M-Pesa retains several advantages that continue to make it the preferred payment platform for millions of Kenyans.

These include:

• Nearly universal acceptance by merchants.
• Millions of registered customers.
• Extensive nationwide agent network.
• Integration with services such as Lipa na M-Pesa, Fuliza, M-Shwari and government payments.
• Ability to transact without requiring a bank account.

For many everyday users, convenience still outweighs transaction cost.

Where PesaLink has the edge

The new pricing makes PesaLink particularly attractive for:

• Businesses paying suppliers.
• Employers making salary payments.
• Customers moving money between multiple bank accounts.
• High-value personal transfers.
• Professionals and freelancers receiving payments directly into bank accounts.

A flat Ksh20 fee on transfers worth hundreds of thousands of shillings represents a substantial saving compared to traditional mobile money charges.

Will this hurt M-Pesa?

Probably, but not immediately.

M-Pesa remains deeply embedded in Kenya’s economy and enjoys an enormous first-mover advantage after nearly two decades of dominance.

However, the latest fee reductions represent one of the strongest coordinated efforts yet by Kenya’s banking industry to reclaim retail payment volumes.

If more banks adopt the new pricing, and if customers become more comfortable using bank apps instead of mobile wallets, the competitive gap between PesaLink and M-Pesa could narrow considerably.

For the first time in years, customers moving money between bank accounts have a compelling reason to compare costs before choosing how to send their money.

The battle for Kenya’s digital payments market is no longer just about convenience; it’s increasingly becoming a battle over price.