Safaricom Looks to Review the Free M-Pesa Deal

Google+ Pinterest LinkedIn Tumblr +

The low-value money transaction free services have led to losses amounting to billions of shillings. The order that lasted between March 16th and June 30th directly affected banks and mobile money transaction service providers.

CBK directed the removal of charges on transactions of up to Kshs 1,000 sent through M-pesa. The regulator also announced free banks to mobile transactions.

The directive was given by CBK, the money regulator, to encourage public members to use cashless means. This was to reduce the fast spread of COVID-19 infections.

After the order’s expiry in June, and without consultation with the affected stakeholders, the regulator further extended the order to December 31st.

Safaricom has experienced a Kshs 9 billion drop in revenues in six months. This is a 6% drop in its net profits to Kshs 33.07 billion – and the first drop in earnings of its kind since 2011.

The affected banks and Safaricom, the leading mobile money service providing company, have protested the unilateral orders by CBK.

Notably, the effects of the COVID-19 pandemic on the economy seem not to improve anytime soon. There is even an increase in the number of new cases being recorded each day.

Therefore, there is a foreseeable possibility of CBK extending the free money transaction tenure after its expiry. It’s in light of this possibility that Safaricom and commercial banks are seeking to be involved in the process should the regulator decide to extend the period.

Peter Ndegwa, Safaricom’s CEO, said they are in the final stages of talks with the Central Bank of Kenya. If they agree, then CBK will direct reinstatement of the transaction charges on low-value transactions after December 31st. However, the telco is not able to tell precisely when the relief tenure is ending since they haven’t conclusively agreed.

 

Share.

About Author

The Author of this Article is a registered Financial & Investment Analyst with Institute of Certified Investment and Financial Analyst. If your require more information Email: info@finsolutions.co.ke or +254 780216631

Leave A Reply