How Banks Are To Soon Beat M-pesa

We all loved the free transfers, and people would split their large transfers into many smaller transactions just to avoid paying any fees. The biggest mobile money provider locally, Safaricom with M-Pesa, admittedly didn’t like this, and there were several reports of them asking the Central Bank to re-introduce fees below 1,000 bob.

The Central Bank of Kenya agreed with Telco’s to remove fees for mobile money transfers below KES. 1,000 and increase the amount of money personal wallets could hold and transfer at a time. This was all in a bid to reduce use of physical cash in the country. And was touted as a mechanism for fighting the spread of COVID-19.

At the beginning of 2021, in a new directive by the Central Bank that introduced new Principles on the Pricing of Mobile Money Services, we reverted to having fees for transactions below KES. 1,000. Only transfers below KES. 100 remain free.

While this was a reprieve for the service providers, for us the users it was bad news. Safaricom, however, decided to reduce M-Pesa transaction fees to sort of make things better. They didn’t bother with the withdrawal charges, which have remained the same.


Even with the new transaction fees, M-Pesa is still very expensive especially for micro-transactions. For example, someone sending KES. 20,000 pays KES. 102, which is 0.51% of the amount. Meanwhile, someone sending KES. 600 will pay KES. 12, which is 2% of the amount.

Free Bank to Mobile and Mobile to Bank:

The biggest reprieve was that Bank to Mobile transfers, and Mobile to Bank transfers would remain free forever. Yes, while these costs didn’t seem like a big deal, for me, their removal has changed how I do a lot of things.

  1. I don’t have to incur high M-Pesa costs when sending money to anyone. I just send money from my bank to the person’s M-Pesa.
  2. I don’t have to always have money on my M-Pesa to use Lipa na M-Pesa; I can transfer money from my bank to my M-Pesa for free and use it to pay for free.
  3. For many people I know, paying rent is now easier with M-Pesa.

We’re already seeing banks introduce free money transfers between users of the same banks, and very low cost charges between users of different banks using things like Pesa Link. We are already seeing free or cheaper withdrawals over the ATM for many banks, compared to the high charges with M-Pesa when withdrawing. There’s lots of ways banks can force a shift in how we view mobile money; If only they spend more time working on ways to get more of their customers to use them – even for micro-transactions. If only they try and make their customers shift from viewing M-Pesa as the default platform.