M-Pesa Rates: an increase or decrease?

The year 2007 saw the birth of an incredible mobile product M-pesa. Kenya’s banking sector took a complete turn and finally, someone rescued Kenyans from stringent conditions and requirements of banks. Something no one ever dared doing.

Banks back then were high profile and urban institutions for that matter which meant alternative ways of saving money most common method being home banks as in the metallic tiny boxes where you have to force in money. Money withdrawal rates were ridiculous not to mention complicated transaction processes with plenty of paper work. M-Pesa came in at the wake of banks’ exodus from rural areas making the unbanked population huge.

The platform’s aim was to create a service which allowed microfinance borrowers to conveniently receive and repay loans using the network of Safaricom airtime resellers. This would enable microfinance institutions (MFIs) to offer more competitive loan rates to their users, as there is a reduced cost of dealing in cash. The users of the service would gain through being able to track their finances more easily. But when the service was trialed, customers adopted the service for a variety of alternative uses. M-Pesa was then refocused and launched with a different value proposition.

The switch to the mobile money system was overwhelming to Safaricom as well, with a platform where one can save, receive and send money at pocket friendly rates, from a transaction fee of about 200ksh to only 25ksh, the deal was as good as closed. In what seemed like a oligopoly market structure, subscribers now got stuck to M-Pesa even after the launch of similar product by rival companies.

Today, financial institutions have introduced mobile money platforms for customers offering low transaction rates and widely distributed agents across the country, the multiple options of money withdrawal, deposition and transfer via personal devices is now a game changer and the big fish feel the heat.

Recently introduced MVNOs seem to be stealing the show on this one; Equity bank’s subsidiary Finserve has hinted on its market entry which comes with enormous offers for subscribers; low calling rates, transaction fees and advanced SIM technology among other services. Equity proposes a charge of 1% of the transaction value, capped at a maximum of Ksh25 which might draw a major subscriber base in the market.  Following its launch, parties of interest have gone to court with different claims and allegations to stop its services from rolling out. This has attracted controversy among the telecoms which foresee instability in subscriber base.

M-PESA rates
Old vs New M-PESA Rates

The telco certainly knows how misleading it is talking of a decrease which clearly is not and how conniving an action it is. If you ask mama mboga today, or rather anyone who only pays attention to headlines and not details, they will tell you M-PESA rates were decreased. Subscribers have the right to genuine information and advertisement or rather the company should strategize better on making up for reductions.Safaricom has ‘decreased’ transaction rates for their customer which I perceive is a way to retain subscribers.

In real sense, the telecommunications company is just playing games on subscribers yet instead; the company has increased the rates by 27 per cent overall. Referring to the comparison table above, the bold digits highlight on the decreased range which is only low P2P consumers raising high value P2P rates. I have not seen or heard anyone call out the telcom company. I have two assumptions here; Either subscribers get the consumer brain game or they still believe this rates have been reduced just because they said so.

Winfred Kuria854 Posts

Winfred Kuria is a self-constituted web content writer in charge of Tech News and Events Publicity at Kachwanya.com. She will communicate in the simplest way possible with an aim of changing the world one mind at a time.


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