Mobile cash transactions hit record Sh5.2trn on phone payment reliefs

Capital markets

Mobile cash transactions hit record Sh5.2trn on phone payment reliefs


An attendant performs an M-Pesa transaction for a customer in Nyeri. PHOTO FILE | NMG

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Summary

  • Kenyans moved 5.21 trillion shillings through their phones last year, equivalent to half of the country’s estimated GDP, boosted by relief measures on cellphone payments to help curb the spread of the coronavirus.
  • New data from the Central Bank of Kenya (CBK) shows total transactions rose 20 percent from 4.34 trillion shillings the previous year.
  • This means that an average of 14.27 billion shillings was processed daily on mobile phones between January and December 2020, which is 2.81 billion shillings more than the daily average of 11.91 billion shillings in 2019.

Kenyans moved 5.21 trillion shillings through their phones last year, equivalent to half of the country’s estimated GDP, boosted by relief measures on cellphone payments to help curb the spread of the coronavirus.

New data from the Central Bank of Kenya (CBK) shows total transactions rose 20 percent from 4.34 trillion shillings the previous year.

This means that an average of 14.27 billion shillings was processed daily on mobile phones between January and December 2020, which is 2.81 billion shillings more than the daily average of 11.91 billion shillings in 2019.

The mobile money agents of Safaricom’s M-Pesa, Telkom’s Airtel Money and TKash processed 3.98 trillion shillings in 2018, highlighting the astronomical growth in transaction value over three years.

“A significant increase in the use of mobile money was noted during the period in which the measures were put in place, demonstrating that they were timely and effective,” said the CBK at its meeting of monetary policy committee in December.

“For example, the monthly volume of person-to-person transactions increased by 87% between February and October 2020.”

The government has introduced several measures, including doubling daily transaction limits to 300,000 shillings and removing fees on small transactions below 1,000 shillings, to discourage the use of hard cash and help contain the spread of Covid-19.

At the initiative of the CBK, other financial payment service companies and commercial banks have also removed fees for customers who transfer money between their mobile wallets and bank accounts.

Data shows that the amount of cash processed by officers from March through December, when the measures were in effect, was 4.49 trillion shillings, more than the 4.34 trillion shillings processed during the year. 2019, highlighting the importance of the CBK guidelines.

Agent-managed cash maintained a steady monthly rise, from 357.37 billion shillings in May to 605.69 billion shillings in December, a record in a month since Kenya began tracking transactions of mobile money.

The gradual reopening of the economy from July saw the money managed by mobile money agents cross the 400 billion shillings mark in one month for the first time amid growing demand for goods and services. services as the sectors began to gradually return to normal. .

The CBK ended free transactions last December, a reprieve for telecommunications operators who had lost billions of shillings in user fees since March.

The measures were supposed to last three months until June of last year, but the CBK extended them until December amid protests from telecom operators.

Safaricom said it lost 9 billion shillings between January and June last year due to free transfers from M-Pesa, which contributed to the 6% drop in its net profit to 33.07 billion shillings, the first in nine years.

Last month, M-Pesa lowered the fee from Sh15 to Sh12 in an effort to maintain the number of customers that had increased due to free transactions.

Safaricom controls 98.8 percent of customers, according to the Kenya Communications Authority (CA), while Airtel Money and other service providers have a 1.2 percent market share.

Mobile money agents processed 450.98 billion shillings in July last year, an increase of 14% from 392.17 billion shillings the previous month after the restrictions were eased, including the resumption of domestic and foreign flights, allowing hotels to reopen and lift travel bans in and out of Nairobi and Mombasa.

The CBK is pushing for a transparent fund transfer between Safaricom and Airtel, including the Lipa na M-Pesa payment service, with the aim of reducing transaction costs, improving competition and maintaining the growing use of mobile platforms.

The banking regulator claims that the mobile transaction interoperability introduced in 2018 for sending money between Airtel and M-Pesa customers did not go far enough to enable transparent transactions because it did not include merchants and the agents.

In the formative years, mobile money platforms were primarily used for person-to-person money transfers, but are now used by businesses for payment for goods and services, a change that has increased their share in the national economy.


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