I&M Bank Kenya has announced that it will not be implementing the return of bank-to-mobile money transaction charges, taking a bold step that will surely have a lasting impact on the financial services industry in the country.
Beginning January 1st 2023, financial services industry players like banks started charging fees for transactions made from their platforms to mobile money platforms like Safaricom’s M-Pesa.
On the other end, mobile money platform owners like Safaricom also re-introduced charges for transactions made from their mobile money wallets to banking platforms with revised pay bill rates.
Both moves were sanctioned by the Central Bank of Kenya, the country’s financial services industry regulator, in December 2022.
A Kenyan has since moved to court seeking to overturn the re-introduction of the charges, which had been suspended in March 2020 as part of the COVID-19 relief measures by the government of Kenya. After a brief suspension, the courts have since ruled that banks and mobile money platform operators are free to continue charging Kenyans the said charges.
Now, in a fresh twist, I&M Bank is seeking to unsettle the order by suspending charges for transactions made on its banking platform that terminate on mobile money wallets.
“As part of our approach to service delivery, recent customer feedback showed that as much as our transaction rates are favourable, there was an opportunity to review our policies on bank-to-mobile money wallet charges for the digitally active customer. We believe this move will offer new and existing customers a huge relief during tough economic times and encourage more customers to transact on mobile,” Michael Mwangi, the bank’s General Manager for Digital Business, is quoted saying at a press conference in Nairobi.
The bank has removed transaction charges for transactions made from accounts held by its customers targeting mobile money wallets on either M-Pesa or Airtel Money. The bank says that it is working on bringing T-Kash customers on board as well. T-Kash is government-owned telecommunications company Telkom Kenya’s mobile money product.
“Our customer feedback showed that as much as our transaction rates were favourable, there was an opportunity to review our policies on bank to mobile money wallet charges (M-PESA and Airtel Money) for the digitally active customer. This is informed by consumer insight on the high cost of living and will offer new to bank and existing customers, some relief during the tough economic times,” the bank says.
The move rekindles an ongoing discussion on the need for the transaction charges, given that, even though banks and telcos registered reduced revenues in the nearly three years that they had been suspended compared to what they would have raked in had the status quo been maintained throughout, they were still able to register massive growth in transaction volumes and values, pushing them to profitability despite the cuts in revenue occasioned by the suspension of transaction charges.
Other financial institutions, like Equity Bank, are on the record last year and the year before urging the regulator to give them the green light to re-introduce charges for transactions made to mobile money wallets, something the regulator eventually did last year, albeit with a reduction of up to 61%.
This, is now null and void.
