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Central Bank of Kenya (CBK) has ended money transfer fees waiver which has seen Kenyans enjoy free services since the outbreak of Covid-19 in 2020.

The development comes as good news for Payment Solution Providers (PSPs), particularly telecommunication firms which had been pushing for reintroduction of the previous charges. 

Safaricom, for instance, is believed to have losing millions of shillings, probably more, that it could make from such M-Pesa transactions.  Central Bank announced reintroduction of charges for transactions between mobile money wallets and bank accounts effective January 2023.

It however, said in a statement that the charges that were suspended in 2020 as part of the emergency measures to facilitate use of mobile money in the context of the pandemic, will be significantly lower than those that applied before.

“Following consultations with Payment Solution Providers and banks, CBK has reviewed the applicable maximum charges for transactions between mobile money and bank accounts, and their alignment to the Pricing Principles,” said CBK Governor Patrick Njoroge.

Maximum charges

Consequently, the revised maximum charges for transfers from bank accounts to mobile money wallets will be reduced, by on average up to 61 per cent, and mobile money wallet to bank account by an average of up to 47 per cent.

Tariffs for pay bills that are used to collect and disburse funds by businesses, companies, and institutions such as schools and utilities, will be reduced by on average 50 per cent, while the charges levied by banks for bank to mobile money transactions will be reduced by on average 45 per cent.

The pricing principles were issued by CBK on December 17, 2020, as the guiding framework for setting tariffs and charges for mobile money services, and related to customer centricity, transparency and disclosure, fairness and equity, choice and competition, and affordability.

According to Njoroge, the revised charges for bank to wallet and wallet to bank transactions will be announced by respective PSPs and banks and will be effective from January 1.

The free bank-to-mobile money wallet transactions was one of the emergency measures introduced by CBK on March 16, 2020 to encourage the use of mobile money instead of cash as a means of curbing the spread of Covid-19. Njoroge said while Covid-19 adversely impacted people’s livelihoods and businesses, mitigation measures enabled the payments ecosystem to protect vulnerable Kenyans, support businesses, and strengthen economic resilience, as a result of which the payments ecosystem expanded significantly.

Monthly volume

He said between March 2020 and October 2022, the number of Kenyans actively using mobile money increased by over 6.2 million, while the monthly volume and value of person to person (P2P) transactions also rose from 162 million transactions worth Sh234 billion, to 440 million transactions worth Sh399 billion, an increase of 171 per cent and 71 per cent, respectively.

The regulator also said monthly volume and value of transactions between PSPs and banks increased from 18 million transactions worth about Sh157 billion, to over 113 million transactions worth Sh800 billion, an increase of 527 per cent and 410 per cent, respectively.

“The resumption of revised charges is aimed at building on these gains, facilitate a transition towards sustainable growth of the mobile money ecosystem, and ensuring affordability of payment services for Kenyans,” Njoroge said.