Equity Bank introduces Sh2.26 transaction SMS confirmation fee to boost non-interest income.

Equity Bank Kenya has introduced a new transaction confirmation alert fee, amounting to Sh2.26 for each SMS sent to its customers. The fee is expected to increase the bank’s non-interest income, which has been steadily growing in recent years. Other banks in Kenya have also followed suit by charging their customers for receiving message alerts, such as Co-operative Bank of Kenya and Absa Bank Kenya.

Being one of the largest commercial banks in Kenya with more than 10 million customers, Equity Bank Kenya has expanded its reach throughout the country. The bank’s total non-interest income has grown to Sh27.5 billion in the year ended December 2022, up from Sh22.8 billion in the previous year. This growth was driven by fees and commissions that are not related to loans, which surged to Sh7.5 billion from Sh6.7 billion.

In 2021, Equity Bank Kenya introduced an annual debit card fee of Sh240, which is expected to earn the bank upwards of Sh2 billion per year, provided most of the issued cards remain active. The introduction of the new transaction confirmation alert fee is projected to further boost the bank’s non-interest income, contributing to its sustainability and profitability.

Although this move may appear to increase the bank’s profits, it is important to note that generating income from various sources is crucial for banks’ sustainability, especially in a low-interest-rate environment. Non-interest income, which encompasses fees and commissions, is a key source of income for banks.

The Central Bank of Kenya had temporarily stopped transaction charges to promote cashless transactions, reducing the risk of Covid-19 infections. However, commercial banks reintroduced these charges at the beginning of 2023, providing them with an opportunity to generate additional income and boost their earnings.


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