Banks, CBK discuss return of mobile money transfer fees

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Banks, CBK discuss return of mobile money transfer fees


Central Bank of Kenya. PHOTO FILE | NMG

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Summary

  • Lenders have seen lower fees and commissions for these transactions and see the end of the charge freeze as an opportunity to increase non-interest income.
  • KCB chief executive Joshua Oigara said the lender is in talks with CBK and hopes for a deal that will allow full or reduced fees by the end of the year.

The banks are in talks with the Central Bank of Kenya (CBK) to reinstate the fees on transferring money from customers from bank accounts to mobile money wallets.

Lenders have seen lower fees and commissions for these transactions and see the end of the charge freeze as an opportunity to increase non-interest income.

KCB chief executive Joshua Oigara said the lender is in talks with CBK and hopes for a deal that will allow full or reduced fees by the end of the year.

“Customers are further digitizing their transactions. We are working with CBK to obtain fees and commissions on these transactions, ”Mr. Oigara said.

“This is a good opportunity to review the charges. I don’t see the loads going back to the levels they were before [the pandemic]. We are seeing a reduced level of fees on mobile transactions.

A return of fees will be a boost for banks that have lost revenue in an environment of increased digital transactions.

Equity Group estimated the loss of revenue last year at 120 million shillings per month.

Banks are losing millions per month due to free transfers between them and wallets like M-Pesa, as they were charging fees ranging from Sh30 to Sh197 before the waivers were introduced.

Fee waivers were introduced in mid-March last year alongside M-Pesa cash transfers of 1,000 shillings and under to help curb the Covid-19 pandemic by curtailing cash handling.

KCB’s mobile banking transactions increased by around 70 percent in the six-month period to June and Mr. Oigara said the increase would offset the reduced rates.

“A number of players have led the way with reduced fees. I think the acceleration in volume can more than compensate for the reduced tariffs, ”Oigara said.

The CBK announced in April the resumption of banking fees on mobile wallets linked to the Sacco sector, prompting lenders such as Co-operative Bank to roll out reduced rates.

The value of KCB’s mobile transactions, including loans, rose 104% to 1.12 trillion shillings at the end of June, from 550 billion shillings in the previous similar period.

However, revenues from these mobile transactions fell 18% to 3.22 billion shillings, underlining the impact of continued fee waivers.


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