Kenya’s major banks want the country’s central bank to reintroduce fees on mobile money transfers
Banks said this has become necessary, following the heavy investments they have made recently to upgrade their digital technology to meet growing transaction demands.
“Banks have invested a lot and if you look at transaction throughput, it’s increased by 50% to 500 million transactions on our digital channels last year. It requires a lot of investment in terms of throughput, back-end and system processing”, The Business Daily quoted KCB Group CEO Joshua Oigara as saying.
Similarly, Absa Kenya CEO Jeremy Awori said “We’ve seen the volume of transactions skyrocket whether it’s M-Pesa or bank-to-bank. When you invest in a mobile platform, it’s performance-based. The thing that causes a bit of concern is that is that if it sticks around for a long time, we’re going to see the innovation and the services coming out of the platform dwindle.
Business Insider Africa understands that Kenyan banks were charging between $0.260 (Sh30) and $1.71 (Sh197) per transaction. However, when COVID-19 hit the East African country, Kenyan authorities scrapped fees on transactions between banks and mobile phones, as part of its stopgap measures to ease the economic burden. caused by the pandemic.
As a result, many Kenyans, including many small and medium enterprises, have started using mobile transfer services in a bid to take advantage of waived fees. Unfortunately, while banks’ digital transaction volume has increased dramatically, the revenue they have generated from this channel has dropped significantly.
At the end of 2020, Kenyan banks made efforts to reinstate transfer fees. However, the Central Bank of Kenya rejected their appeal, only reinstating transfer fees on credit union-related transactions in April 2021.
The implication of this, therefore, is that between March 2020 and present, the majority of banks in Kenya had to invest heavily to upgrade their digital technology infrastructure, transacted huge volumes of transactions on these channels and n did not charge any fees.
That’s why they’re urging the apex bank to rethink the waiver. As Equity Bank CEO James Mwangi said, removing the waiver would help level the playing field between banks and other players such as telcos and fintechs.