Kenya’s financial regulator – Central Bank of Kenya will not extend regulations put in place to allow free under Ksh. 1,000 cash transfers on mobile wallets such as MPESA that are set to expire at the end of the year on December 31st 2020. The new regulations were enforced back in March of 2020 to help mitigate the effect of Covid-19 pandemic which put pressure on a lot of low-income households in the country. Additionally, in an effort to curb its spread, the government encouraged Kenyans to use cashless transactions which may otherwise have fueled the virus.
While the measures were initially intended to last for six months, the government through the financial regulator extended the guidelines until the end of this year despite protest from companies like Safaricom. Kenyans were able to sent multiple amounts below Ksh. 1,000 daily without incurring any transaction charges, a move that strained relations between Safaricom – Kenya’s largest mobile service provider, owner of MPESA mobile money services and the regulator.
The guideline provided much needed relief to low-income Kenyans while at the same time reduced the overall revenue Safaricom generated from MPESA. During the same financial period, Safaricom’s revenue from MPESA dipped compared to last year. It eventually impacted Safaricom’s earnings, although the operator had generally experienced increased business volumes. Consequently, there are reports of Safaricom intending to cut down transaction costs on some customers to encourage increased volumes. There are also plans for the largest mobile service provider to expand its service offering within MPESA to include; Unit Trust, Insurance and Savings.
In a statement released by the Central Bank of Kenya, the regulator indicates it had reassessed emergency measures put in place with intention of consolidating on gains made so far and also facilitate a transition towards sustainable growth of the mobile money ecosystem. The regulator noted it had consulted payment service providers and thereby allow emergency measures to expire on December 31, 2020. Payment service providers are expected to introduce revised pricing structures from January 1, 2021.
Revised guidelines are as follows;
- No charge on transactions below Ksh. 100
- No transaction costs for transferring money between mobile wallets and bank accounts
- Sacco’s will however be allowed to levy a charge for transfers between SACCO accounts and mobile money wallets