Mobile cash transactions hit a record Sh474b in August

A mobile (M-PESA) pay bill menu. Most businesses have resorted to mobile money transaction as a way of reducing the spread of Covid-19 pandemic. [Elvis Ogina, Standard]

Mobile payments hit a historic high of Sh473.5 billion in August as Kenyans continued to enjoy subsidised financial services on their handsets.

According to the latest data from the Central Bank of Kenya (CBK), this was an increase of almost a third compared to the same month last year, when mobile transactions were valued at Sh364 billion.

On March 16, CBK announced measures to facilitate increased use of mobile money transactions instead of cash in what was aimed at curbing the spread of Covid-19.

Among some of the measures announced by the financial regulator, following consultation with stakeholders, was waiving of fees for transactions of amounts upto Sh1,000.

Fees on transfers between mobile money wallets and bank accounts were also removed.

These measures were to remain in place for three months to the end of June, but were extended to the end of the year much to the chagrin of banks and payment service providers. The move has seen firms such as Safaricom which runs mobile money transfer service M-Pesa not earn much from this revenue stream.

When extending the measures, CBK noted that there has been a significant increase in the use of mobile money channels by individuals in both value and number of transactions.

“Most of the increase was in low-value transactions of Sh1,000 or less — this band accounts for over 80 per cent of mobile money transactions and charges were eliminated, which has helped cushion the most vulnerable households,” said CBK in a statement.  

CBK added that ever since the measures started being implemented, more than 1.6 million additional customers are now using mobile money channels.

By August, there were over 62.8 million registered mobile money accounts, which means that an additional four million accounts have been added since March when the total mobile money accounts were 58.7 million.

In April, a month after the country registered its first case of Covid-19 and the government started implementing stringent containment measures, the value of mobile payments dipped to Sh307.9 billion in April from Sh364.5 billion in March.

Year-on-year, this was a decline of 14.4 per cent from Sh360.2 billion that was transacted in April 2019. But the transactions picked up in the following month, surpassing the Sh400 billion mark in July.  

But banks and payment service providers such as Safaricom and Airtel are not entirely happy as they have been losing revenue due to the emergency measures.

Most of them make money by charging fees on transactions, some of which have since been scrapped.

With the outbreak of Covid-19, the Central Bank of Rwanda also mandated that cashless payments be made available with zero charges on all transfers between bank accounts and mobile wallets, zero charges on all mobile money transfers, zero fees on payments for point-of-sale transactions.

And while the small East African country saw mobile money transactions grow by 450 per cent in three months, the financial regulator was forced to end the programme fearing that it would hurt the industry.