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Kenya's top banks want the country's central bank to re-introduce charges on mobile money transfers

Governor Patrick Njoroge of the Central Bank of Kenya
  • Business Insider Africa understands that Kenyan banks used to charge between $0.260 (Sh30) and $1.71 (Sh197) per mobile transaction.
  • But the transaction fees were waived in March 2020 as part of the palliative measures aimed at easing the economic burden of the pandemic.
  • While banks have since recorded a dramatic increase in the demand for mobile transfers, they have been unable to earn revenue from this channel.

Some of Kenya's top banks —Equity Bank, Absa Kenya and KCB Group —have urged the Central Bank of Kenya to consider reinstating fees for transfers between banks and mobile money wallets.

The banks said this has become necessary, following heavy investments they've made recently to upgrade their digital technology in order to meet up with growing transaction demands.

“Banks have invested a lot and if you look at the transaction throughput, it is up 50 percent 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,” Business Daily quoted KCB Group's Chief Executive Officer Joshua Oigara to have said.

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Similarly, the CEO of Absa Kenya, Jeremy Awori, said "we saw the volume of transactions shoot up whether it was M-Pesa or bank-to-bank. 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 the innovation and services coming out of the platform reduce.”

Business Insider Africa understands that Kenyan banks used to charge between $0.260 (Sh30) and $1.71 (Sh197) per transaction. However, when COVID-19 hit the East African country, Kenyan authorities waived fees on bank to mobile phone transactions, as part of its palliative measures to ease the economic burden caused by the pandemic.

Consequently, many Kenyans, including a lot of small and medium sized businesses, began using mobile transfer services in a bid to take advantage of the waived fees. Unfortunately, while banks' digital transaction volume increased dramatically, the revenue they generated from this channel dropped significantly.

By ending of 2020, Kenyan banks made efforts to have the transfer fees reinstated. However, the Central Bank of Kenya rejected their call, only reinstating fees for transfers on transactions linked to savings and credit cooperative organisations in April 2021.

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The implication of this, therefore, is that between March 2020 and now, majority of the banks in Kenya have had to invest heavily to upgrade their digital technology infrastructure, performed huge volumes of transactions on these channels and earned no fees.

This is why they are urging the apex bank to rethink the waiver. As the CEO of Equity Bank James Mwangi said, removing the waiver would help level the playing field between banks and other players such as telcos and fintechs.

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