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Safaricom Lost Sh5.1 Billion In Foregone Revenue As Free M-Pesa Transactions For Sh1,000 Lapse

M-Pesa agent [IMAGE/ COURTESY]

The 90 day deal between the government and Mobile money operators which saw transaction fees for Sh1,000 and less waived has elapsed. The deal saw Safaricom lose approximately Sh1.7 billion worth of revenue every month between March and June, amounting to Sh5.1 billion in three months.

This was just one of the measures put in place to help curb the spread of the COVID-19 pandemic. Kenyans were advised to avoid handling cash and use electronic money transfer for most of their transactions. The deal also roped in banks, who waived costs for moving money electronically from bank to mobile money wallets.

In April this year, Safaricom said they were projecting a Sh5.5 billion hit on its M-Pesa revenue in the three months from mid-March following the waiver imposed on mobile money transactions for Sh1,000 and below.

Read: Business Owners Can Now Make Payments Directly From Their MPesa Till Number

Data from CBK shows an 83 percent growth of daily average mobile phone money transactions of less than Sh1,000 to Sh1.98 billion daily between April 20 and May 10, compared to the days before March 16, just four days after Kenya announced its first positive Covid-19 case.

However, there was an 18.4 percent decline in mobile transactions of amounts more than Sh1,000, dropping to Sh5.6 billion daily. This coincided with the country’s economic decline that has seen many employers trim down their workforce, effect pay cuts and some business close.

CBK did not provide data on individual telcos handling of the mobile money, but data from the Communications Authority of Kenya (CA) shows that Safaricom’s M-Pesa controlled 99.9 percent of the mobile money transactions in the quarter leading to December.

Airtel and Telkom Kenya each held less than 0.1 percent mobile phone cash transfers in the same period.

Read: KRA Can Now Pry Your MPESA and Bank Transactions for Tax Compliance

The Telcos and the other firms involved are now looking up to the Central Bank of Kenya (CBK) to give direction as far as the free services are concerned.

“We are still waiting for a response from the Central Bank, we do not know if they intend to extend,” Safaricom said.

Through the lobby group, The Kenya Bankers Association (KBA), the lenders said that the members will decide on the free offer, and the banking industry should arrive at a decision on the adjusted rates by the end of the month.

“Different stakeholders had different timelines. For IPSL (Integrated Payment Service Limited or PesaLink) it takes effect up to June 30, then we shall have discussions on how to proceed whether it remains the same or we make adjustments,” KBA chief executive Habil Olaka told the Business Daily in an interview. “You know it was more of a moral appeal to institutions to support the government initiative to accommodate those affected”.

Kenya has so far reported 4, 478 cases of Covid-19 and 121 deaths with the disease infection rate expected to peak in September.

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Written by Vanessa Murrey

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