I&M Bank in Kenya has become the first lender in the country to waive all transaction fees for transfers between its platform and mobile wallets, including M-Pesa, Airtel Money, and T-Kash for Telkom users. The bank had previously charged customers between KES10 and KES65 for transactions, in line with the Central Bank of Kenya’s (CBK) guidelines. However, following customer feedback and in a bid to support customers during tough economic times, I&M Bank has decided to remove all fees.
The CBK temporarily suspended these charges in mid-March 2020 in response to the COVID-19 pandemic, which had increased the need for contactless transactions. However, in January 2023, the regulator reinstated these levies, following an outcry from customers. Most of I&M Bank’s competitors, including KCB, Equity, Cooperative, NCBA, Absa Kenya, Standard Chartered Bank Kenya, Diamond Trust Bank, and Stanbic, have reinstated the transaction charges.
I&M Bank has stated that the waiver is part of its iMara 2.0 digital banking strategy, aimed at growing the bank’s digital products. According to I&M Bank’s General Manager for Digital Business, Michael Mwangi, “We look forward to seeing these numbers grow with digital transactions gaining favor among our digitally active customers”. The move has been welcomed by many customers, and I&M Bank hopes that it will encourage more customers to transact on mobile.
The temporary removal of transaction fees led to a significant increase in the number of Kenyans actively using mobile money, with the monthly volume of person-to-person (P2P) transactions rising from 162 million to 440 million, and the value of P2P transactions increasing from KES234 billion to KES399 billion. The monthly volume and value of transactions between payment service providers and banks also increased from 18 million transactions worth about KES157 billion to over 113 million transactions worth KES800 billion.
The CBK’s reintroduction of transaction fees had been challenged in court, with the High Court issuing interim orders suspending the return of the levies until the case was heard and determined. However, this challenge was unsuccessful, and transaction fees have since been reinstated.
I&M Bank’s decision to waive all transaction fees for transfers between its platform and mobile wallets is a significant move likely to attract more customers to the bank’s digital products. While all other banks have reinstated these fees, I&M Bank’s decision to remove them entirely shows that the bank is committed to supporting its customers during tough economic times and it will be interesting to see how this move impacts the bank’s business moving forward.