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Why Bank to M-Pesa Charges Were Suspended

The charges had been stopped in 2020 at the height of Covid-19 in Kenya, ostensibly to boost cashless transactions

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Kenyans are breathing a sigh of relief following the suspension of bank to mobile money wallet transfer charges by a Nairobi court. In a petition filed by Moses Wafula, a Nairobi resident challenging the costs to consumers, High Court judge Mugure Thande ordered the Central Bank of Kenya (CBK) and telco Safaricom to suspend the reintroduction of bank-to-MPesa charges pending the determination of the suit.

The case will be mentioned on January 23, 2023. Charges on transfers between bank accounts and mobile money wallets returned at the turn of the year following a directive issued by the apex bank on December 6, 2022.

The charges had been stopped in 2020 at the height of Covid-19 in Kenya, ostensibly to boost cashless transactions.

Wafula, however, moved to court to challenge the legality of the bank to M-Pesa transfer fees charged to consumers entirely. Highlighting Safaricom’s agreements with the financial institutions, he argues that the costs should not be passed to consumers as the banks should foot the bill for using Safaricom’s M-Pesa Lipa na M-Pesa pay bill infrastructure.

“Safaricom has no authority to charge members of the public for a service offered to its contracting service recipients including banks,” Wafula argued.

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“The petition pending determination illustrates that the engagement between Safaricom and its M-Pesa Paybill clients (such as Banks, Government agencies, Kenya power, DStv, Bettíng firms, mobile money companies, and other institutions) is a bipartite business engagement between Safaricom as the M-Pesa paybill service provider and their M-Pesa paybill primary clients being the service recipients,” he continued.

“Banks and other financial institutions using the Paybill system are classified as Safaricom’s Mpesa Paybill primary clients.”

“The Banks being one of the Safaricom’s Mpesa Paybill primary clients also elect to pass the Safaricom Mpesa Paybill charges to the members of the public.”

He called for the charges to be stopped arguing that if they were found to be íllegal, the losses to Kenyans for the period they have been in effect would mount immensely, and it could be difficult for affected customers to receive refunds.

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