Central Bank reintroduces charges for Mobile Money to Bank Transactions

The Central Bank of Kenya has announced that effective 1st January 2023, Kenyans will be charged transaction fees when moving money from their mobile money accounts to their banks, and vice versa.

During the first lock-down period, as part of measures to reduce spread of COVID-19, the Central Bank waived mobile money transaction fees of up to KES 1000, and transaction costs between mobile money wallets and banks. This has been a highly contested decision by both banks and telcos, with Safaricom being especially vocal about the reduced profits.

However, the decision has tremendously increased uptake of mobile money. The Central Bank says they’ve witnessed an increase by over 6.2 million new users. The monthly volume and value of P2P transactions has increased from 162 million transactions worth KES 234 Billion to 440 million transactions worth KES 399 billion. That represents an increase of 171 percent and 71 percent respectively.

So, why re-introduce the charges now? When everything seems to be working well, especially for uptake, and for the consumers?

Well, the Central Bank says, following consultations with PSPs and banks, it has reviewed the applicable maximum charges for transactions between mobile money and bank accounts, and their alignment to the Pricing Principles. These are the principles that were introduced when the Central Bank re-introduced transaction costs for transactions below KES 1,000.

So what will change now that Central Bank has reintroduced mobile money to bank transactions costs?

1. Maximum charges for transfers from Banks to Mobile Money wallets will be reduced by an average of 61%.
2. Maximum charges for transfers from Mobile Money wallets to Banks will be reduced by an average of 47%.
3. Tariffs for PayBills that are used to collect and disburse funds by businesses, companies, and institutions such as schools, utilities, etc, will be reduced by an average of 50%.
4. The charges levied by banks for bank to mobile money transactions will be reduced by on average 45%.

So you cannot know outright what your respective bank will charge you for mobile money transactions. That’s until they declare it, if they ever will. Some banks will have you discover the rates for yourselves.

Some banks never removed the charges when moving money from say M-Pesa to your account. Some will take this opportunity to introduce charges that don’t make sense, for example balance requests. And there will no longer be a way to avoid M-Pesa’s expensive rates.