Equity distances itself from hike in money transfer fees, blames Safaricom

NAIROBI: Equity Bank has sought to deflect reports that it increased money transfer charges on its platform, Equitel, and has instead laid the blame on Safaricom.

The lender’s officials have accused the country’s largest telecommunication firm of trying to stifle Equitel’s growth.

Last week, Safaricom increased termination charges — the amount customers pay when they transfer money from a different network to M-Pesa — igniting fierce debate on social media. The move came amid concerns the price change may have come at the wrong time, given that the telco is fighting off dominance claims.

Confusion over the increased charges has forced Equity to inform customers who had signed up for Equitel, marketed as a low-cost platform, that it had nothing to do with the price changes.

“We have not increased our charges, just as promised during the launch. Equitel charges are zero when you transfer money to an Equitel member or Equity account. To transfer money to another mobile number, Equitel’s charge is one per cent, with a maximum charge of Sh25,” Equity Group Holdings CEO James Mwangi said last week.

But with the revisions, transfers from a bank account to an M-Pesa account will now cost Sh15 for amounts ranging between Sh50 and Sh1,000, and Sh22 for amounts between Sh1,001 and Sh70,000.

However, tariffs for third-party transactions have increased to Sh22 for amounts falling between Sh50 and Sh1,000, and a high of Sh110 for amounts between Sh20,001 and Sh70,000.

As a result, transferring Sh1,000 from Equitel to Equitel or Equity Bank will be free, but moving the same amount from an Equitel account to a bank account will cost Sh40. Following the changes on third-party transfers, it will now cost a minimum of Sh55 to transfer Sh1,000 from one’s bank account to a different person’s M-Pesa line.

PRICE WAR

The price hike is the latest hurdle Equity Bank has to contend with following a series of court cases that sought to block its implementation of ThinSim technology on Equitel lines.

The platform’s launch was stopped by the High Court when the Legal Advice Centre filed a case claiming that the Communications Authority of Kenya (CA) had approved the ThinSim technology before a full audit was done on its security risks.

Equitel subscribers have access to services such as money transfer, voice calls and SMSes like users on other mobile networks.

Before the price revisions, the maximum amount a customer would pay while transferring cash from Equitel to M-Pesa was Sh25 per transaction. This meant that Equitel to M-Pesa transfers were cheaper than M-Pesa to M-Pesa transfers for amounts above Sh1,500.

In a recent letter, Safaricom wrote to its partner banks, providing incentive discounts if customers are encouraged to transfer money from their accounts to their mobile numbers, and then on to third parties.

“In the event that you still prefer third-party transfers, then that will be subject to the revised tariff rates set out,” the letter, which is signed by Rita Okuthe, the general manager of Safaricom’s Enterprise Business, reads in part.

“These changes have arisen partly in light of our on-going efforts to streamline our M-Pesa proposition, and also partly in response to our continuous efforts to ensure compliance with regulatory guidelines.”

The telco also indicated concern over an increase in the number of fraudulent transactions between bank and mobile accounts.

“It has come to our attention that there has been an increase in the number of alleged incidents of erroneous and fraudulent transfers involving bank customers utilising their accounts to transfer money to M-Pesa accounts.

“The increase in cases has been attributed to the fact that customers are enabled to make direct M-Pesa transfers to third-party accounts.”

[email protected]