Equity Bank doubles Equitel to M-Pesa transfer fees

Equity Bank has more than doubled the cost of moving cash from Equitel, its mobile money transfer service, to Safaricom’s M-Pesa, in what appears to be a strategy to discourage Equitel user from linking with its rival.

This the kind of war mobile operators have played by punishing cross-network calls to keep subcribers within their platform.

M-Pesa is Kenya’s largest mobile money platform, with over 11 million users compared with Equitel’s less than 1 million.  The new charges were implemented beginning August, just as Equitel officially announced its transition from a pilot phase. No official communication on the new charges was relayed to Equitel users, according to subscribers.

Previously,  Equitel to M-Pesa transfers were charged a uniform Ksh33 per transaction.  This meant that Equitel to M-Pesa transfers were cheaper than M-Pesa to M-Pesa transfers for amounts above Ksh1,500. This made Equitel a more attractive proposition, just as it looked to gain market share, especially from M-Pesa, reports infotake.co.ke.

Below is a select sample of amounts and the new charges,  compared with the old charges.

The new charges mean it will be cheaper for users to instead withdraw cash from their account over the ATM in batches, deposit that at an M-Pesa agent for free then take advantage of the lower M-Pesa fees.

This presents a big blow for Equitel’s strategy, given that there are more mobile money users on M-Pesa than on Equitel. It further reinforces the network effect, where mobile money users will tend to favour transactions within the same platform, than between platforms. “Such a network effect rewards larger platforms – your friends are likely to be on a larger platform, hence you are likely to prefer the same – and makes smaller platforms less attractive to new users,” says infotake.

An enquiry by infotake to Equitel’s Customer Care says that the new fees were brought about by Safaricom’s increase in “termination fee” – the money Equitel pays Safaricom for money transacted to M-Pesa. Equity says it’s Equitel charges are capped at Ksh27.50, and that any extra fee here is being levied by Safaricom.

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