Top banks urge Central Bank of Kenya (CBK) to reinstate M-Pesa fees

Kenya’s top banks have renewed push for the regulator to reinstate charges on transfers of money between bank accounts and mobile money wallets, citing heavy investments in digital technology to keep pace with growing transactions.

KCB, Equity and Absa reckon the waiver of fees on bank-to-mobile phone transactions triggered an increase in transactions as dominant micro and small-sized businesses embraced the digital channels.

The lenders used to charge between Sh30 to Sh197 before the waivers were introduced in mid-March 2020 to contain the spread of the Covid-19 virus.

“Banks have invested a lot and if you look at the transaction throughput, it is up 50% to 500 million transactions on our digital channels last year. This requires a lot of investment in terms of throughput, back-end and system processing,” KCB Group chief executive Joshua Oigara said.

Transactions on KCB digital channels such as mobile banking increased by nearly half to 496 million last year on resumption of economic activities, KCB reported. Revenue on digital channels, however, fell a further 5.9% to ShSh9.0 billion from Sh9.6 billion in 2020 and nearly Sh11.5 billion in 2019.

Equity Group, on the other hand, reported non-branch transactions last year jumped 47% to Sh1.14 billion, a trend that was also reflected at Absa Bank Kenya.

“We saw the volume of transactions shoot up whether it was M-Pesa (or)…bank-to-bank,” Absa Kenya chief executive Jeremy Awori said. “When you are investing in a mobile platform it is based on a return. The thing that is causing a little worry is that if it stays for long, we are going to see innovation and services coming out of the platform reduce.”

CBK rejected bankers’ push to reinstate fees on the transfer of cash between accounts and mobile phone wallets at the end of 2020 when it ended free M-Pesa transactions of up to Sh1,000.

“This year, we have had long discussions. It’s just not KBA (Kenya Bankers Association) anymore. It’s a bank-to-bank specific bilateral conversation that’s going on. There must be a way of giving justifications as well,”Mr. Oigara said.

“The way I think the regime will go is that there would be some transactions for which the banks will not charge.”

Losing millions

Banks say they are losing millions every month due to the free transfers between them and wallets such as M-Pesa.

The CBK in April last year announced the resumption of charges of bank to mobile wallets that are linked to the sacco sector.

Equity chief executive James Mwangi has said reinstating the mobile transfer fees will level the playing field between banks, telecoms companies operating in the financial space and micro lenders.