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Tough January as free mobile transactions come to end

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Days after the National Treasury announced the scrapping of the Covid-19 tax waivers, the Central Bank of Kenya (CBK) has also ended the free mobile money and bank transfers in what promises consumers a tough January.

CBK announced emergency measures on March 16, 2020 to facilitate increased use of mobile money transactions instead of cash, in the context of the coronavirus pandemic.

These measures ran until June 30, 2020 and were extended until December 31, 2020 after a review.

But the CBK said on Thursday that it has now allowed mobile companies to revert back to the pre-Covid rates, except for transactions below Sh100 following consultations with Payment Service Providers (PSPs).

It said this will allow the emergency measures to expire on December 31, 2020, and PSPs will introduce revised pricing structures from January 1, 2021.

The good news is that there will be no charge for person-to-person transfers of up to Sh100 to any customer and network. There will also be no charges for transfers between mobile money wallets and bank accounts.

But that is where the good news ends.

The banking sector regulator noted that a significant increase of mobile money usage has been noted over the period the measures have been in place, demonstrating that they were timely and effective. For instance, the monthly volume of person-to-person transactions increased by 87 per cent between February and October 2020.

Over this period the volume of transactions below Sh1,000 increased by 114 per cent, while 2.8 million additional customers are using mobile money.

“Business-related transactions also recorded significant growth over the same period,” CBK said in a statement.

“CBK has reassessed the emergency measures with the objective of consolidating the gains made so far and also facilitate a transition towards sustainable growth of the mobile- money ecosystem.”

The regulator says to facilitate the integration of Savings and Credit Societies (Saccos) with the mobile money ecosystem, Saccos regulated by the Sacco Societies Regulatory Authority (SASRA) may levy a charge for transfers between Sacco accounts and mobile money wallets.

“CBK will oversee these charges in the context of the products that banks and PSPs offer to SACCOs,” the statement added.

Going forward, PSPs will propose pricing structures that reflect the “Pricing Principles” that CBK has introduced.

These “Principles” aim to support the development of an efficient, safe and stable payments and mobile money ecosystem where the customer and public interests are adequately protected.

“It is noted that the wallet and transactions limits that were announced on March 16, 2020, will remain in force as was communicated earlier. CBK will continue to monitor developments in the payments ecosystem and take any necessary actions.” – Nation Media Group

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