Safaricom and commercial banks are engaging the Central Bank of Kenya (CBK) to determine the future of free M-Pesa and mobile money transactions.

Charges on M-Pesa transactions of Ksh1,000 or less were initially removed from March 16 to June 30, before the CBK made the unilateral decision to extend the program until December 31. Charges were also removed on bank to mobile transactions in the same period.

The decisions were meant to promote cashless payments to curb the spread of the Covid-19 virus.

Now, with infection numbers rising again, Safaricom and banks fear that the CBK could unilaterally extend the tenure of the free transactions beyond December 31.

Safaricom, which in its half-year results reported a drop in net profit for the first time since 2009, estimates that the free transactions cost it Ksh9 billion in the six months to June.

The telco saw profit after tax drop six percent to Ksh33 billion, down from Ksh35 billion the previous year.

Ndegwa had on Monday, November 9 disclosed that they were in talks with CBK over the free 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,” he stated while announcing the telco’s results.

KCB CEO Joshua Oigara also confirmed that they would seek a cap on free transfers if the program was to be extended beyond December.

The bank’s Q3 results released on Wednesday, November 11 saw KCB record a 43 per cent drop in profit through the first nine months of the year to September 30, 2020.

The lender’s profit fell to Ksh10.2 billion, down from Ksh19.2 billion the previous year. KCB estimates that free transfers cost the bank around Ksh1.5 billion.

“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.

“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 p******c evolves,” he stated.

The free transfers have catalyzed the adoption of mobile money among small businesses in Kenya.

From matatus to grocery vendors (mama mboga), enterprises that were previously cash-only are now willing to accept mobile money payment options.

Safaricom recently rolled out its Pochi la Biashara feature targeting Small and Medium Sized Enterprises (SMEs) using mobile money.

The service allows entrepreneurs to separate their personal and business wallets on M-Pesa, with funds in business wallets not affected by the Fuliza overdraft service.

Sourced from Business today