Safaricom and commercial banks are fighting Central Bank of Kenya (CBK) to avoid a unilateral regulatory extension of free M-Pesa and mobile banking transactions amid the spike in Covid-19 cases in the country.

Safaricom and the banks want the CBK to involve them in any discussions pertaining extension of free transactions beyond end of December 2020.

The CBK announced the removal of charges on M-Pesa transactions of up to Sh1,000 from March 16 until June 30, a period when bank-to-mobile phone transactions would also be free.

The key aim of slashing the transaction fees was to encourage cashless transactions in Kenya as a way to curb the spread of Coronavirus in the country.

Safaricom’s chief executive, Peter Ndegwa, said the telco was in advanced talks with the CBK over the resumption charges on low-value M-Pesa transactions.

“We are not ready at this stage to announce when the free cash transfers end as we are still in engagements with the CBK,” said Mr Ndegwa.

Safaricom is keen to end the free money transfer after it ate to their profits at a tune of Ksh 9 billion in six months only.

At Sh9 billion, the estimated revenue loss is equivalent to 25 percent of the Sh35.88 billion Safaricom made from the M-Pesa platform in the six months to September and 7.2 percent of total revenue in the same period.

With the rising Corona cases, Safaricom is fearful that the government might decide to extend the free cash transfer.

KCB Group CEO Joshua Oigara said the bank was in talks with the CBK to impose a cap on the free transfers if the reliefs were extended beyond December.

Unlike in Safaricom, banks do not charge customers for moving money between their mobile wallets and bank accounts irrespective of the amount.

“We are having engagements with the CBK at the moment. We are optimistic that maybe some transactions will go back to where we were before and maybe others continue under the current waiver,” said Mr Oigara.

“We are not naïve that maybe some transactions will not finally go back to where they were before March 2020. The timings will also depend on how the pandemic evolves.”

Safaricom says that most customers are splitting transactions to avoid paying transaction fee making the company lose much needed profit.

“What has happened a lot in those transactions below Sh1,000 is that people are starting to split transactions. If they want to send Sh60,000 they split it into 60 transactions. And believe it or not, people actually do that,” Safaricom chairman Michael Joseph said July in a conference call with investors in his previous role as acting chief executive.