CBK Stops Free Under KES 1000 Mobile Money Transfers

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central bank of kenya

The COVID-19 pandemic saw the government, among other Kenya financial institutions introduce measures to cushion Kenyans from the financial pangs of the pandemic.

The developments included zero-rating cash transfers of under KES 1000 for mobile money products. This occurred from March 2020 to June, and the CBK extended the measure to Dec 31, 2020.

According to CBK the measure will not be extended anymore. This means that before the new year, customers will be required to furnish the transfers with transaction fees.


However, the fees will not be the same because CBK and payment partners are planning to introduce revised transaction fees.

This was expected, because Safaricom’s M-PESA had hinted that it was planning to adjust transaction fees.

This has been a tough period for businesses and our customers and we committed ourselves to walk through this journey together. During this period, we took several initiatives to support our customers and the government to pull through this pandemic – CEO Peter Ndegwa

In the meantime, we do not know what the new charges will be, but transfers under KES 100 will be free as of 2021.

Also, mobile money to bank charges will be free.

For the developments, here is a statement from the bank:

CBK has reassessed the emergency measures with the objective of consolidating the gains made so far and also facilitate a transition towards sustainable growth of the mobile money ecosystem. Following consultations with Payment Service Providers (PSPs), CBK will allow the emergency measures to expire on December 31, 2020, and PSPs will introduce revised pricing structures from January 1, 2021, with the following elements:

  1. There will be no charge for person-to-person transfers of up to Ksh.100 to any customer and network.
  2. There will be no charges for transfers between mobile money wallets and bank accounts.
  3. To facilitate the integration of Savings and Credit Societies (SACCOs) with the mobile money ecosystem, SACCOs regulated by the Sacco Societies Regulatory Authority (SASRA) may levy a charge for transfers between SACCO accounts and mobile money wallets. CBK will oversee these charges in the context of the products that banks and PSPs offer to SACCOs.
  4. Going forward, PSPs will propose pricing structures that reflect the “Pricing Principles” that CBK has introduced. These “Principles” aim to support the development of an efficient, safe, and stable payments and mobile money ecosystem where the customer and public interests are adequately protected. It is noted that the wallet and transaction limits that were announced on March 16, 2020, will remain in force as was communicated earlier. CBK will continue to monitor developments in the payments ecosystem and take any necessary actions.

The principles said are highlighted as below:

PRINCIPLES ON THE PRICING OF MOBILE MONEY SERVICES

  1. Purpose To facilitate the development of an efficient, safe, and stable electronic payments ecosystem where the customer and public interests are adequately protected.
  2. Specific objectives (a) To increase access, usage, and equity in the provision of digital payments services; (b) To improve transparency and disclosure in the provision of digital payments services; (c) To foster a business culture underpinned by the primacy of customer’s interest: (d) To promote competitiveness and sustainable growth of digital payment services.
  3. Basis
    These principles arc issued by the Central I3ank of Kenya (CBK) based on its mandate of promoting an efficient and effective payment system, and to issue advice and direction while paying due regard to among other things, efficiency, integrity, and public interest.
  4. Principles
    A. Customer centricity: Adequate consideration of a customer’s needs, preferences, and circumstances in the design. pricing and roll-out of mobile money services. The primacy of the customer interest must be evident in how services are developed, priced, and marketed.
    B. Transparency and disclosure: Clear description of charges. fees and charges that a customer will incur at the point of sale, are during the use of the service. Terms and conditions should be in simple and legible language. Conflicts of interest ought to be disclosed, where there is a risk this will lead to mis-selling of inappropriate services to obtain commissions or fees.
    C. Fairness and equity: Provision and pricing of mobile money services in a manner that is proportional to the service provided and benefit obtained. Pricing policies and practices should pay due regard to the profile of customers and the purpose of the underlying payment.
    D. Choice and competition: Customers should be presented with cost-effective options. Customers must be presented with mechanisms and channels that enable frictionless comparison, choice, and switching, including resolution of complaints, particularly price-related ones, without undue delays. E. Affordability: Provision and pricing of services in a manner that is proportional to low-value and other “public good” related payments. Pricing policies need to strike a balance between short-term commercial targets and long-term sustainable growth.
  5. Responsibility: Responsibility for alignment and implementation of these principles rests on the Board of Directors of Payment Service Providers (PSPs). PSP Boards arc required to (a) Champion these principles in their governance and oversight duties by setting the appropriate “tone from the top” that is aligned to the principles (b) Ensure formulation of internal policies and procedures that actualize the principles across their entire business operations; (c) Hold management accountable for adherence to these principles by staff business partners and agents associated with the PSP, (d) Ensure timely and accurate submission of information. data and returns to the CBK as required from tittle to tittle.
  6. Implementation and monitoring: CBK has developed these principles as it embarks on the journey to anchor review of mobile money tariffs and charges based on the intended purpose and objectives above. Implementation will be carried on a gradual basis. CBK will be periodically engaging PSPs to ensure alignment. identify and promote best practices in implementation.