Safaricom Plc, Kenya’s largest mobile network operator, is on an intense lobby to have the free KSh 1,000 cash transfer offer, on its MPesa platform, lifted before the end of this month.
While the Central Bank of Kenya (CBK) instructed banks and payment services providers to waive charges on mobile money and mobile banking transactions, Safaricom has been loud in seeking the waivers not to be extended beyond December 2020.
Treasury has already reverted to the standard VAT tax band of 16% which was lowered to 14% while those exempting from paying income tax have also been brought back to the net.
Safaricom CEO Peter Ndegwa told Reuters that the firm has not seen any reason by the CBK should seek any further extensions of the fee waivers.
Free transfers of amounts below KSh 1,000 on Mpesa has hit the bottom line of Safaricom, given the contribution of this cash transfer business to its profits.
The free waivers have also hit banks on amounts transferred from the accounts to the mobile wallet.
Figures from the banking industry show an increase in bad debts and a decline in fees and commissions earned by lenders due to waiving payments on the bank-mobile money transactions.
Reports from financial sector regulators show that mobile cash transfer services have become critical in facilitating person-to-person (P2P), customer-to-business (C2B), and Person or Business to Government transactions.
Safaricom and other mobile cash operators have contributed significantly to deepening financial inclusion. The introduction of interoperability within the mobile money payment Service in April 2018 among the Mobile Network Operators (MNOs) has enabled money transfers across platforms, reducing the need for multiple subscriptions.
Safaricom’s impact on households, businesses, and government operations, makes its Mpesa platform critical to the economy and Kenya’s financial system.
Any mobile money services outages and reliability concerns affect transactions in the economy; hence, they are systemically important.
Mpesa Contribution to Safaricom Revenue
Figures from Safaricom’s financial reports indicate that M-PESA now contributes 33.6% of the telco’s service revenue while mobile data’s contribution is 16.2%. This revenue mix has allowed Safaricom to reduce previous reliance on voice and messaging revenue. Fixed data now packs in 3.6% of Safaricom’s service revenue.
Safaricom has meanwhile expanded its M-PESA partnerships to include Visa-a global leader in digital payments. This pact will enable Safaricom roll out products to support digital payments for M-PESA locations throughout Visa’s global network, and over 3.4 billion Visa cards users.
Safaricom is seeking to eliminate barriers to global commerce and offer an expanded set of mobile e-commerce capabilities to merchants and consumers by enabling secure and convenient cashless payment solutions