Safaricom’s M-Pesa platform experienced a notable boost in revenue thanks to the reintroduction of charges on bank-to-mobile transactions.
From mid-March 2020 until the end of last year, the Central Bank of Kenya (CBK) had waived fees on cash transfers between banks and mobile wallets, and vice versa.
However, at the beginning of this year, the charges were reintroduced, albeit at reduced levels. This move significantly contributed to Safaricom’s revenue growth during the final three months of their financial year, which concluded in March.
During the review period, Safaricom witnessed a substantial 25.7 percent increase in total revenue from these transactions, reaching Sh2.6 billion. This was a significant improvement compared to the previous year, where revenue stood at Sh2.07 billion.
In terms of revenue generated from mobile wallets to bank accounts, Safaricom observed a respectable 13.9 percent growth, reaching Sh19.13 billion.
Regarding bank-to-mobile transactions, the majority of charges are allocated to the lending institutions, while the telco retains a smaller share of the fee as part of their revenue-sharing agreements.
Although the transaction tariffs were considerably reduced, both banks and Safaricom, as the leading mobile money provider, could continue to expand their revenue if digital payment adoption continues to rise.
On average, banks reduced their charges by 45 percent, while Safaricom and Airtel lowered their fees by up to 47 percent.
The initial waiver of fees aimed to provide financial relief to consumers and encourage the adoption of cashless transactions during the Covid-19 pandemic, which spread through contact with contaminated surfaces and other means.
The elimination of fees resulted in a surge in digital payments, as highlighted by the CBK. Between March 2020 and October 2022, the number of active mobile money users in Kenya increased by more than 6.2 million.
During the same period, the monthly volume and value of person-to-person transactions grew from 162 million transactions worth Sh234 billion to 440 million transactions worth Sh399 billion.
In December, the CBK expressed satisfaction with these outcomes, stating that the mitigation measures were timely and effective, leading to significant benefits across the financial system.
The reintroduction of revised charges aims to build upon these gains, support the sustainable growth of the mobile money ecosystem, and ensure affordable payment services for Kenyans.