Safaricom lost a petition to limit free transactions between two people, in a bid to protect revenues. The Telco wanted to cap the free transactions at five, to limit incidences where individuals split high-value transactions to avoid transaction charges. In March, the Central bank of Kenya removed charges between mobile money wallets for amounts below 1,000 in an effort to promote electronic transactions during the pandemic.
“We have pressurized the CBK to allow us to cap the number of split transactions at five. So far CBK has not obliged, but we are continuing to put pressure on them,” said Michael Joseph, former Safaricom CEO. “And we hope as we go forward that we will be able to cap transactions below five. This has had an impact on service revenue.”
SEE ALSO: CBK Maintains Free Mobile Money – Bank Transfers
According to a Business Daily article, Safaricom also asked the regulator to lower the ceiling for free mobile money transactions from 1000 to 500.
Records from the Central Bank show that mobile money transactions for amounts below KSh 1,000 grew significantly, at the expense of transfers above KSh 1,000. Transactions between KSh 100 – 1000 grew by over 1.5 million transactions, whereas transactions between KSh 1001 – 10,000 fell by 0.5 million in the first two months of the waiver.
Free Transactions are Trimming Revenues
Safaricom is losing an average of KSh 1.8 billion a month, thanks to the free transactions. This could cost the company KSh 16.2 billion in revenues by the end of the year.
The loss in revenues from the transaction waiver is also affecting other players in the mobile money industry. Equity Group CEO James Mwangi says that the waiver is costing the bank up to KSh 120 million a month in revenues.