This archive report was first published on 25 June 2020.
Published on June 25, 2020, the Central Bank of Kenya (CBK) has extended the waiver on mobile money transaction fees under Sh1,000 for another six months, a move that could see Safaricom lose up to Sh15.3 billion.
The banking sector regulator said the free service aimed at cutting down on the handling of cash and the attendant risk of COVID-19 transmission will run to the end of December.
Commercial banks, which had removed charges for customers moving money between their mobile wallets and bank accounts on March 16, will also be affected by the order.
Safaricom had earlier estimated that the free M-Pesa service had seen it lose an average of Sh1.8 billion monthly since mid-March, potentially missing sales of up to Sh16.2 billion in the nine months to December.
The Sh16.2 billion is equivalent to about a fifth or 19.1 percent of M-Pesa's annual sales, underlining the impact of the pandemic on Safaricom's earnings.
CBK said the free service has increased low-value mobile phone transactions, which account for 80 percent of all mobile money transfers.
“CBK has determined that the wallet and transactions limit…will remain in place from July 1 until December 31, 2020,” the regulator said in a statement.
“More than 1.6 million additional customers are now using mobile money channels. However, business-related transactions have declined marginally,” added the CBK.
Communications Authority of Kenya (CA) figures show that Safaricom via M-Pesa controlled 99.9 percent of the cash transfers in the quarter to December, while Airtel and Telkom Kenya held less than 0.1 percent.
Safaricom said it would take a Sh5.5 billion hit on its M-Pesa revenue in the three months from mid-March after it waived transaction fees on mobile money transfers under Sh1,000.
CEO Peter Ndegwa, who took over on April 1, said the company was not worried by the projection, stating, “When Kenya gets back on track, our business should get back on track.”
