Taxation back for bank, mobile money operators

Tuesday, January 24th, 2023 05:20 | By
Taxation back for bank, mobile money operators
Justice Mugure Thande declined a request by Moses Wafula to extend orders temporarily halting the introduction of charges for bank and mobile transactions. PD/courtesy

Banks and mobile money operators will continue to levy fees for cash transfers between their platforms after the High Court declined to extend temporary orders suspending the charges.

Justice Mugure Thande yesterday rejected a request by Moses Wafula to extend orders that had temporarily halted the introduction of charges between the bank and mobile transactions. Judge Thande denied the request to extend the order on the grounds that the Central Bank of Kenya (CBK) and other parties are yet to be enjoined in the proceedings.

The temporary order had been issued on December 19, 2022, and had put brakes on the decision of the Central Bank of Kenya (CBK) dated December 6 last year allowing telecoms and financial institutions to reinstate charges on transferred funds from banks to M-Pesa wallets.

When the matter came up for further directions yesterday, Wafula who is the petitioner in the case asked the court to extend the temporary order pending the hearing of the case.

Senior Counsel John Ohaga representing Safaricom and George Oraro representing CBK opposed the extension of the order. On his side, Ohaga told the court that the absence of the main file which is pending before Justice Antony Mrima caused the grant of the order which in a result has caused significant confusion in the marketplace.

The lawyer said there is difficulty in compliance with the order.  Justice Thande heard that when the temporary order was issued in December last year, CBK as a regulator of the banks and Mpesa platform was required to direct the banks to suspend the reinstated charges.

“There is difficulty in compliance with the order. CBK is yet to be made a party to the case. There are at least three intended respondents who have not yet been joined as respondents. The ruling on the same is pending before Mrima,” said Ohaga.

When Wafula filed the case in court, he sued Safaricom and the Attorney General making them the only respondents in the case. He later filed an application seeking to have the CBK, CS Treasury and Competition Authority of Kenya joined as respondents in the case. That application is still pending for ruling before Justice Mrima.

Since the main file is with Judge Mrima, Justice Thande directed that the matter be placed before him for mention and further directions on March 8.

re-introduction of charges

The petitioner is challenging the re-introduction of charges for mobile money wallets and bank transactions as advanced by the CBK through a press release issued on December 6, 2022.  The transaction charges were waived in March 2020 as part of covid-19 emergency measures to help ease the cost of living.

Wafula claims that should the court find that the Mpesa paybill charges are illegal, more funds from the members of the public will have been lost and it may be difficult to ask the banks to refund the same.

Wafula contends that his rights and those of other members of the public have been violated, infringed and continue to be threatened by the giant telecommunication firm and the Government of Kenya in view of the directive issued by CBK. “It is in contravention of the law for the banks to continue riding on the Mpesa paybill infrastructure and making money from members of the public,” he argues.

He said charges incurred in Mpesa paybill services are to be paid for by Safaricom’s primary clients such as banks and not the consumers.

Lacks authority

Wafula says Mpesa paybill services are an outsourced service, “Safaricom has no authority to charge members of the public for a service offered to its contracting service recipients including banks”.

“The petition pending determination illustrates that the engagement between Safaricom and its Mpesa paybill clients (such as banks, government agencies, Kenya power, DSTV, betting companies, mobile money companies, and other institutions) is a bipartite business engagement between Safaricom as the Mpesa paybill service provider and their Mpesa paybill primary clients being the service recipients,” he says.

The petition relates to financial consumer rights with a focus on the area of payment services provided by Safaricom Limited in the form of Lipa na M-pesa pay Bill Service.

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