Some of you may have observed that some small businesses, especially those at the grassroots that have, for some time, been accepting payment via till numbers have brought down the placards in their shops. Personally, I did not do realize the extent of the development until I passed by my barber who has since suspended the payment channel that is still popular among merchants in the country.
These actions, as it appears, are preceded by a law routine exercise requires any businesses with till/pay bill numbers to verify the authenticity of the service through a fresh registration. Merchants, among other traders who did not adhere to the deadline (May 30) have since opted for other means of payment (cash is still popular) including cases where a client sends money to businessperson’s personal line.
The law was enforced to scrutinize transactions, especially those that have been suspected of performing dubious and unlawful deals such as fraud and money laundering.
According to Safaricom, the exercise was put in place to ensure that Lipa Na M-PESA merchants meet their obligations and have the correct documentation for the product.
“To help Lipa Na M-PESA merchants meet their obligations as set by the law, we have been carrying out a routine exercise to validate their documentation. This ensures all merchants’ documentation on Lipa Na M-PESA are accurately captured in our systems. More than 90 percent of merchants’ documents have already been verified. We are in the process of confirming documents for the rest of merchants,” noted Rita Okuthe, Director – Enterprise Business, Safaricom.
Admittedly, merchants rely heavily on the offerings of these services, and non-compliance to the regulations may slow down payments channels for the remaining 10 percent.
PS: We will recap the requirements for a Lipa Na M-PESA account in our next post.
Safaricom’s take on the revised excise duty
During the presentation of the budget for the 2018/2019 Financial Year, the Ministry of Finance and Kenya’s Treasury announced its plan to revise taxes on mobile money transactions upwards from 10 percent to 12 percent. This is not good news for people that have invested in and uses mobile money services heavily. It makes sense to see telco Safaricom come forward and dispute the decision because it owns the lion’s share of mobile finance operations in the country.
The government’s defense is its need to achieve higher tax collection projections, which, sadly is going to hurt more pockets for stakeholders to just let it slide.
According to Safaricom’s CFO Mr. Sateesh Kamath, increasing the excise duty will have a negative impact on what is purposed to be achieved, which is stunted growth toward an economy that transacts via digital money.
In particular, most Kenyan citizens have no bank accounts, and have since leveraged M-PESA and its associated services for financial inclusion, hence, slapping them with additional tax couldn’t have seen worse timing.
In line with the first part of the post, merchants are already taxed heavily during withdrawals. Also, ordinary users pay a significant amount of money when sending and withdrawing cash – and will probably pay more once this tax revision goes live.
We will see how these developments play out and inform you accordingly.