The waiver on mobile money transactions of up to Ksh.1, 000 could be impacting negatively on Safaricom’s earnings. The telco company announced the zero-rating of the person to person and Lipa na M-PESA transactions in March to reduce the risk of handling cash due to COVID and was to end on June 30, 2020, but was extended to 31st December by the Central Bank.
According to Business Daily, Safaricom had petition the Central Bank of Kenya to allow it to cap the number of multiple transactions between two numbers to five entries. This is after the telecoms operator noted that Kenyans were splitting high-value money transfers as high as Sh60,000 to deals of below Sh1,000 to escape the transaction charges that ideally would have cost them Sh105. Safaricom also asked the CBK to lower the threshold for free mobile money transactions from Sh1, 000 to Sh500 to cut revenue losses estimated at Sh1.7 billion monthly. The telco company however lost the bid.
Safaricom’s earlier results revealed that the waiver on M-PESA service had seen it lose an average of Sh1.8 billion monthly since mid-March, and it could lose up to Kenya Shillings 16.2 billion in the nine months to December. This is equivalent to 19.1 percent of M-Pesa’s annual sales.
The Central Bank of Kenya, last week disclosed that there was a significant increase in the use of mobile money channels by individuals in both value and number of transactions, most of which were low-value transactions of Ksh.1,000 or less. According to the regulator, more than 1.6 million additional customers are now using mobile to carry out their transactions. The CBK extended the waiver on all mobile money transaction fees under Sh1,000 for another six months after the initial 90-day period lapsed.
