Safaricom has announced a reduction of transaction fees levied by the operator on M-PESA on the low and medium transaction bands, this is in line with its strategic objective of transforming lives through financial inclusion.
The new tariffs, which are set to take effect from Thursday August 21, will see transaction fees reduced by up to 67 percent in the low and medium tiered bands which include the transfer of amounts ranging between Sh10 to Sh1,500.
While making the tariff revision announcement, the operator also signaled that it had rationalized the tariffs for sending higher amounts exceeding Sh1,501 to be an average of 0.8 percent of the transaction value.
“We have spent a considerable amount of time analyzing M-PESA usage trends and we have established that over 65 percent of all M-PESA person to person transactions are within the Sh10 – Sh1,500 band. It is our belief that by lowering the cost of these transactions we will provide an increased number of Kenyans with affordable access to basic financial services,” said Safaricom CEO Bob Collymore.
He added, “Our financial services portfolio now contributes close to 20 percent of our overall revenues and pushing through a tariff reduction of this magnitude is an expression of confidence in our longer term strategy to drive the growth of a cash-lite economy that delivers financial inclusion to millions of Kenyans through the convenience and affordability of our financial products.”
Collymore explained that withdrawal tariffs as well as the transaction fees for Lipa Na M-PESA and indeed all other tariffs, will remain unchanged, following the tariff review announced on Tuesday.
The tariff announcement comes as Safaricom prepares to move the M-PESA’s backbone infrastructure from Germany to Kenya, in an investment that will open up more opportunities for cashless transactions within the country.
M-PESA was introduced in 2007 and has grown to have over 19.3 million customers, which is more than 80 percent of the country’s adult population.
THe move to cut the transactions fees comes days after Equity Bank announced intentions to launch a mobile money transfer among its clients.
Collymore shrugs off any threat in an interview with Wall Street Journal. He says his firm isn’t competing against Equity but for the 95% of Kenyan transactions that are still done in cash.
“The market is massive, it’s there to be had,” Collymore says. “I don’t worry about Equity.”