M-Pesa users face tariff raise for amounts above Sh1,500 [Business Daily (Kenya)]
(Business Daily (Kenya) Via Acquire Media NewsEdge) Safaricom has signalled a tariff increase for users of the M-Pesa mobile cash system sending Sh1,501 and above, but reduced by up to 67 per cent the charges for those making transfers of up to Sh1,500.
The telecommunications firm, which is facing new competition from Equity Bank's planned mobile money services, said Tuesday it will cost an average of 0.8 per cent to send amounts above Sh1,500 on M-Pesa.
Though Safaricom did not give a detailed breakdown of the new M-Pesa tariff structure, the 0.8 per cent average is an indication that it will cost much more to send higher amounts on the popular platform.
The telco however said nearly two-thirds of M-Pesa users send amounts below Sh1,500 which will now cost Sh25 to transfer from the previous Sh33.
Equity Bank has indicated that it will charge customers a maximum of Sh25 to transfer money on its planned Mobile Virtual Network Operator (MVNO) service.
"We have spent a considerable amount of time analysing M-Pesa usage trends and we have established that over 65 per cent of its 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 Tuesday in a statement.
The 0.8 per cent will be charged on a graduated scalem which Safaricom did not however disclose.
The tariff review follows a similar one that the firm made in February last year. The expected entry of Equity Bank's mobile financial services subsidiary Finserve is seen as a potential game changer in the industry.
"While making the tariff revision announcement, …… we signalled rationalised tariffs for sending higher amounts exceeding Sh1,501 to be an average of 0.8 per cent of the transaction value," said the Safaricom statement.
READ: Equity seeks to halve transaction costs with mobile licence
Equity Bank's MVNO licence has however been delayed by a court case and a complaint letter that Safaricom sent to the telecommunications regulator petitioning for a review of the intended use of a paper-thin SIM cards that can be embedded on the conventional SIMs to help users operate double SIMs.
Bob Collymore, Safaricom's CEO said the firm had analysed the M-Pesa transaction trends and found that 65 per cent of most transactions fall within the lower band.
Mr Collymore added that withdrawal charges as well as the transaction fees for Lipa Na M-Pesa and 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 per cent of the country's adult population.
The service recorded a peak average of 260 transactions per second and 440 airtime top-up transactions per second in the fiscal year ended March 2014, in which it earned the telecommunications firm Sh26.56 billion.
"Our financial services portfolio now contributes close to 20 per cent 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," Mr Collymore added.
Recently Safaricom said it intends to boost the number of M-Pesa transactions through the retail supply services and Lipa na M-Pesa.
Last week, Safaricom, partnered with a local IT firm, Virtual City, to launch the M-Distributor service targeting manufacturers and distributors of fast-moving consumer goods (FMCG) to eliminate use of cash in the supply chain. M-Distributor is an Android mobile app.
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