Treasury prepares to cut M-Pesa charges
Treasury is working on a proposal to cut M-Pesa transfer charges in a move that looks set to hurt Safaricom’s revenues.
Treasury CS Ukur Yatani told the Senate that there was a need to make M-Pesa cheaper at a time when the mobile money platform has become deeply entrenched in Kenyans’ business and daily lives.
The push to review the charges will add to the battles that Safaricom is facing over its dominance, including the move to cut calling rates and calls to have it broken up and forced to run M-Pesa as a separate business from the telecoms service.
The CS said the Treasury was aware of the rising concerns among consumers and small businesses over M-Pesa’s transaction charges.
“Another source of concern with mobile money stems from the perception both by consumers and small businesses that the rents from digital technology are unfairly accruing to Safaricom PLC,” said Mr Yatani in his presentation to the Senate on Safaricom’s dominance.
“This is in the area of unconscionable/excessive rates and Safaricom being a critical trading partner for SMEs and consumers… We will soon be presenting some proposed amendments to deal with this scenario.” He added.
The full cost, including sending and withdrawal, of transferring Sh5,000 on M-Pesa is Sh159 while Airtel charges Sh75.
It costs Sh296 to transfer Sh25,000 on M-Pesa and Sh160 on Airtel.
The smaller operators have long argued that Safaricom enjoys a dominant position because it accounts for 90 percent of revenues in areas such as mobile money transfer, voice calls and text messages.
Safaricom has consistently rejected the accusations of dominance amid repeated parliamentary petitions for probe of market abuse by rivals.
Safaricom’s control of the market has prompted a push for regulatory changes by its rivals who allege that the telco is abusing dominance.
The Treasury in earlier reports warned that the collapse of the M-Pesa service would cause widespread disruption in the economy.
The Treasury said a technology disaster affecting the M-Pesa-dominated mobile transactions was now a fiscal risk, placing the money transfer systems among other potential threats to the economy that are watched keenly by policy wonks.
The report noted that various financial products have been leveraged on the M-Pesa payment channel, increasing the inter-linkages between the technology and the banking sector.
In the year ended March 2021, M-Pesa revenues stood at Sh82.64 billion, ahead of voice at Sh82.55 billion.
Overall, Safaricom recorded revenues of Sh264 billion, yielding a net profit of Sh68.68 billion.