Business

Safaricom cuts M-Pesa transfer costs by 45pc

Wednesday, December 23rd, 2020 00:00 | By
Safaricom CEO Peter Ndegwa.

Safaricom has cut M-Pesa transaction fees by up to 45 per cent to retain the higher business volumes and lock in the new 3.2 million active users that came in after the imposition of free transactions of up to Sh1,000.

“We have taken the decision to reduce our M-Pesa tariffs by up to 45 per cent for lower value transaction bands.

This is in consideration of the expiry of the period for the zero-rated M-Pesa transactions and ongoing Covid-19 and economic circumstances,” Safaricom CEO Peter Ndegwa said in a statement to the media.

The tariff reductions, the firm said will affect more than 90 per cent of all customer transactions when sending money.

According to Safaricom’s new M-Pesa tariff, it will now cost Sh6 to send between Sh101 and 500, down from Sh11.

Customers sending between Sh1,501 and Sh2,500 will part with Sh32 down from Sh41 while alll transactions of Sh100 and below will remain free and all M-Pesa customers will continue to enjoy free transactions between M-Pesa and bank accounts.

The company said that the new tariffs are not temporary but long-term and will be effective from beginning of next month.

Ngegwa said: “The price cuts are permanent, effective January 1, 2021 and will enable our more than 26.8 million customers to continue enjoying lower costs whenever they send money.”

The company also added that the new, reduced tariffs will equally apply to transactions for micro-businesses under our new Pochi La Biashara service, and for Lipa Na M-Pesa businesses using the transacting till to make payments.

Central Bank of Kenya (CBK) in March announced the removal of charges on M-Pesa transactions of up to Sh1,000.

The government also cut income tax for individuals and companies to ease the pain of Covid. Due to these measures M-Pesa active users rose  by 3.2 million.

The move to drive cashless transactions through tariff cut to curb the spread of the coronavirus, helped increase the value of M-Pesa transactions by a third to Sh9 trillion. 

Amount of money moving on Safaricom’s M-Pesa platform jumped 15 per cent to Sh5 billion in the six months ended September.

Cheaper money

The listed telco said that it lost 25 per cent of its revenues worth Sh9 billion to Sh36 billion in the six months to September as its profits fell by 6 per cent to Sh33.07 billion.

M-Pesa money transaction charges have been rising over the years locking many Kenyans out while opening new opportunities for cheaper money transfer fintech innovations.

Kenya’s Covid-19 infections spiked in November and December but had started going down.

However, fears of a new Covid-19 strain in UK and South Africa has sent countries banning air travel with Britain while raising concerns the new vaccines could fail to end new infections.

Kenya has reported 94,000 infections with fatalities of over 1,600 cases since March to December.

Ndegwa had said that it was cautious about how consumers will respond when the free service is withdrawn and suggested that the company could cut charges to retain users.

M-Pesa had about 27 million active users as of June this year according to its latest financial reports.

Safaricom had started pushing the regulator to lift the cap on transaction charges saying it was eating into its profits after the CBK extended the expiry for free transactions to December 31.

KCB Group CEO Joshua Oigara said the bank was in talks with the CBK to impose a cap on the free transfers if the reliefs were extended beyond December.

Presently, banks do not charge customers for moving money between their mobile wallets and bank accounts irrespective of the amount.

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