Safaricom seeks talks with CBK on bank transfer charges

However, Ndegwa said the charges could be reinstated at a lower rate, just as it happened with the charges on transactions of Sh1,000 and below, which had also been waived but were later restored.

"If we go back to charging, it will be at a much lower price than when we started. The same that we did with P-2-P (peer-to-peer), it will be at a much lower price."

The free bank-to-mobile money wallet transactions was one of the emergency measures introduced by CBK on March 16, 2020 to encourage the use of mobile money instead of cash as a means of curbing the spread of Covid-19.

The measures were to run until June 30, 2020 but were extended until December 31, 2020 after a review.

They were revised on January 1, with the free mobile transactions being lowered to amounts of Sh100 and below, enough to facilitate mobile money payments for bus fare and small food items at Mama Mboga.

However, the waiver on charges for mobile money-to-bank was retained, denying telcos such as Safaricom and banks a major source of income.

With the waiver of fees for transfer, a lot of Kenyans had a field day, with Safaricom's M-Pesa losing Sh6 billion.

M-Pesa has grown into a critical revenue stream for the telco, with the mobile money service contributing about 45 per cent of its total income.

Many banks also reported a drop on non-funded income in 2020, which includes fees and commissions, owing to the free bank-to-wallet transfers.

Other Covid-19 relief measures that were put in place included a 6-12 months moratorium on listing of Kenyans with credit reference bureaus, with borrowers enjoying a loan repayment holiday during this period.

On the government side, there was tax reduction on pay-as-you-earn (PAYE) and the 16 per cent value-added tax.

These measures, the CBK noted, helped cushion Kenyans against the negative effects of the pandemic that led to businesses crumbling and thousands of workers rendered jobless.

These measures have since ended.

Ndegwa, however, said they have seen significant increase in the amount that comes through from bank to wallet and wallet to bank due to the waiver of the fees.

Moreover, Safaricom is also acting like a collection ecosystem for banks, with the agent network growing 50 per cent.

"So, today, actually banks don't need to set up branches because if you want cash, it comes through the agent network.

"Although we are not receiving a lot of money that goes to the bank, we pay commissions," said Ndegwa, adding that there are 250,000 small agents.

Safaricom's revenue in the short term could also drop after the operator, together with KCB and NCBA banks, halved the maintenance fees on Fuliza, an overdraft facility that the three own together.

Fuliza has been a big hit for Safaricom, with the company's latest annual report showing that Sh502.6 billion was disbursed through the facility in the year ended March 2022, an increase of 43 per cent compared to the same period last year.

This means that close to Sh1.4 billion is transacted on Fuliza daily.

The default rate is nearly zero. And with borrowers paying a daily fee of up to a maximum of Sh30 per day for each day the facility remains unpaid, Fuliza was a real cash-cow for Safaricom and the two banks.

Unfortunately, as more and more people jumped in, including millions who had no capacity to repay the facility in a short time, Fuliza mutated into a long-term loan.

Borrowers overstayed with the facility. And the charges became hefty.

However, the three companies recently agreed to not only lower the maintenance fee by half but also waive it in the first three days for transactions of Sh1,000 and below.

Mr Ndegwa told The Standard that the goal is to return Fuliza to its original purpose of being an emergency facility, where the loan was to be repaid as fast as it had been taken.

"Waiving the daily maintenance fee for the first three days is an incentive, which encourages you to pay in a short period (time) rather than wait for 10 days," he said.