Banks seek to reinstate mobile cash transfer fees

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Banks seek to reinstate mobile cash transfer fees


The central bank of Kenya, in Nairobi, on Sunday, November 22, 2020. PHOTO | DENNIS ONSONGO | NMG

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Summary

  • Banks will seek to pressure the Central Bank of Kenya (CBK) to reinstate charges on transferring money from customers from bank accounts to mobile money wallets.
  • Lenders have seen lower fees and commissions for these transactions and are considering ending the freeze to increase non-interest income.
  • The Kenya Bankers Association (KBA) – the lobby of lenders – says mitigating the effects of Covid-19 on the economy would allow it to push for the return of charges next year.

Banks will seek to pressure the Central Bank of Kenya (CBK) to reinstate charges on transferring money from customers from bank accounts to mobile money wallets.

Lenders have seen lower fees and commissions for these transactions and are considering ending the freeze to increase non-interest income.

The Kenya Bankers Association (KBA) – the lobby of lenders – says mitigating the effects of Covid-19 on the economy would allow it to push for the return of charges next year.

Relief on cellphone payments was introduced from March 16 to encourage cashless payments on cellphones as part of efforts to contain the spread of the coronavirus.

They included the doubling of daily transaction limits to Sh300,000 after the first case of Covid-19 was reported.

“We can think about pushing for a review next year if we are satisfied that we have come out enough of the woods,” said Habil Olaka, managing director of KBA.

“2021 has been very unpredictable when we thought we were out, we saw new waves rise, new restrictions were introduced and even now we don’t know how the Omicron variants are going to evolve. “

Banks are losing millions per month due to free transfers between them and wallets like M-Pesa, given that they charged fees ranging from Sh 30 to 197 before the waivers were introduced.

At the end of last year, the CBK rejected pressure from bankers to reinstate fees for transferring cash between accounts and cell phone wallets, even though it ended free M-Pesa transactions until to 1,000 shillings.

Banks have not pressured the CBK to reimburse the fees for transferring money between their mobile wallets and bank accounts, which has seen some like the KCB group lose 1.5 billion shillings over the course of the year. nine months.

The CBK announced in April the resumption of bank charges to mobile wallets linked to the Sacco sector, prompting lenders such as Co-operative Bank to roll out reduced rates.

Bankers believe that the fee waiver on bank-to-mobile phone transactions has triggered an increase in deposits as small businesses embraced the digital channel and reduced branch visits for cash deposits.

CBK also said the free M-Pesa service has led to increased use of mobile money transfer and added users to the phone company’s cash payment service.


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