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The Central Bank of Kenya (CBK) has announced that it is working on a proposal to cut M-Pesa transfer tariffs in a move that may hurt mobile operator Safaricom’s revenues, as the service generate more revenue than voice.
This was said by Treasury Cabinet Secretary Ukur Yatani to Senate that there was need to make M-Pesa cheaper as there have been rising concerns among consumers and small businesses over M-Pesa’s transaction charges, reported Business Daily.
M-Pesa accounted for about 99.9 percent of the value of mobile money transactions, underlining the entrenchment of the platform in Kenya’s economy.
“Another source of concern with mobile money stems from the perception both by consumers and small businesses that the rents from digital technology are unfairly accruing to Safaricom Plc,” said Mr Yatani in his presentation to the Senate on Safaricom’s dominance.
“This is in the area of unconscionable/excessive rates and Safaricom being a critical trading partner for SMEs and consumers… We will soon be presenting some proposed amendments to deal with this scenario.”
The full cost, including sending and withdrawal, of transferring Sh5,000 on M-Pesa is Sh159 while Airtel charges Sh75. It costs Sh296 to transfer Sh25,000 on M-Pesa and Sh160 on Airtel.
Safaricom is Kenya’s biggest firm by market capitalisation and dwarfs the two other operators in the mobile market — Airtel Kenya and Telkom Kenya.
The smaller operators have long argued that Safaricom enjoys a dominant position because it accounts for 90 percent of revenues in areas such as mobile money transfer, voice calls and text messages.
Safaricom has consistently rejected the accusations of dominance amid repeated parliamentary petitions for probe of market abuse by rivals.
Data from the Central Bank of Kenya (CBK) shows that M-Pesa grew its share of the value of mobile money transactions in the last three years to hit Sh2.206 trillion (99.9 percent) out of the total of Sh2.208 trillion worth of transactions in 2021.
M-Pesa’s growth ate into the market of Airtel Money and Telkom’s T-Kash in the period, with their shares dropping to 0.2 percent and 0.1 percent respectively.
Safaricom’s control of the market has prompted a push for regulatory changes by its rivals who allege that the telco is abusing dominance.
The Treasury in earlier reports warned that the collapse of the M-Pesa service would cause widespread disruption in the economy.
The Treasury said a technology disaster affecting the M-Pesa-dominated mobile transactions was now a fiscal risk, placing the money transfer systems among other potential threats to the economy that are watched keenly by policy wonks.
The report noted that various financial products have been leveraged on the M-Pesa payment channel, increasing the inter-linkages between the technology and the banking sector.
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