The Central Bank of Kenya (CBK) in a notice issued on Thursday, April 1 announced the resumption of charges for transactions above Ksh100 effected through bank-specific (in-house) mobile money wallets linked to the Savings and Credit Societies (Sacco) sector.
CBK cited concerns that the current price regime could spell doom for the viability of the services offered by saccos which rely on the integrations to connect them to the mobile money ecosystem, given the underlying costs.
“Through them (bank-specific wallets), banks provide saccos with an important bridge to the domestic and cross border payment system.
“…This is a significant risk for Saccos and their extensive membership due to the lack of other alternatives to connect to the mobile money ecosystem. The resumption of charges will provide space to increase connection options for Saccos,” the CBK noted.
With Kenya’s strong Sacco culture, the resumption of transaction charges is expected to add onto the woes of many Kenyans already struggling under the weight of harsh economic times.
CBK stated that the resumption of charges would be subject to review in line with principles announced in December 2020 of customer centricity, transparency and disclosure, fairness and equity, choice and competition and affordability.
Banks in Kenya typically deploy two kinds of mobile money wallets. The first involves partnership with payment service providers to utilize their mobile money wallets to facilitate a range of transactions through customers’ bank accounts.
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The second model (in-house) sees banks invest directly in their own in-house mobile banking wallets to facilitate mobile money and other wallet-based financial services. This model usually involves a third party as a technology provider.
Charges on the mobile money transactions were initially scrapped as part of CBK measures in response to the Covid-19 pandemic in April 2020.
At the time, charges on mobile money transactions of Ksh1,000 or less were also scrapped before being re-introduced at the start of 2021.