Steve Umidha

TRANSACTIONS:  Payments made using mobile phones will rise in the coming days after President Uhuru Kenyatta yesterday called on financial agencies to reduce transaction fees and encouraged citizens to avoid handling physical cash in the wake of Covid-19 spread.

As a result, analysts now say those agencies will ride on the anticipated high transaction volumes to increase their profit margins which declined in the first month of the year and a good number of providers could lower their operation costs in a bid to drive traffic their way.

“Many providers might actually reduce their transaction costs because volumes will without doubt increase,” says Peter Macharia, a banker and a financial expert, adding that such firms will also use the opportunity to market some of the not so popular digital fund transfer products among Kenyans such as pay pal and RTGS.

The Sunday evening plea by Uhuru to financial agencies is meant to contain the virus’ spread, after Kenya confirmed its first case of coronavirus on March 13 with two more cases made public on Sunday.

Digital financial providers now look certain to benefit from the pandemic that has not only hit the local financial system hard – which saw trading at the Nairobi Securities Exchange (NSE) on Friday halt after benchmark index plunged by five per cent, but also the global markets that continue to plummet.

Physical branches

That tipping point will happen almost instantaneously, according to managing director of Gulf African Bank Abdalla Abdulkhalik, when the number of customers regularly using branches will be overtaken by those using Apps and popular mediums like M-Pesa and mobile money for funds transfers.

“We expect to see that drift almost straightway beginning today and that goes without saying,” said Abdalla, who believes the trend will continue in the conceivable future owing to the uncertainty of the deadly Covid-19.

Latest figures by the Central Bank of Kenya (CBK) show that the use of mobile phones in making payments declined in January on the back of low circulation of cash in the economy, the narrative is however, likely to change when CBK releases February figures.