Digital Payment Adoption Rises Among Kenya’s MSEs – Survey

Digital Payment like send money and till numbers grows in Kenya
Digital Payment options in Kenya

Survey findings indicate that small businesses are increasingly leveraging Digital Payment platforms to run their operations. This means more Micro and Small Enterprises (MSEs) are digitizing their business.

In this survey, digitalization included the use of mobile money (Send money, Till numbers, PayBill numbers, and Pochi La Biashara). Additionally, the survey analysed the use of digital bank transfers (EFT, SWIFT, Pesalink), and Credit/ Debit cards.

Based on the survey small businesses in Kenya have embraced at least one digital payment channel.

Adoption of digital channels in Kenya is higher among female-owned, urban, and owner-operated businesses. This is in comparison to male-owned, rural businesses and businesses with 1-9 employees. Furthermore, between October 2022 to June 2023, the adoption of digital payment channels increased from 73.5 percent to 85.6 percent.

In fact, the percentage of MSEs that accept mobile money payments increased from 68.2 percent in October 2022 to 76.4 percent in June 2023.  This shows MSEs received money via send money more than the other forms of Mobile Money.

Despite that, there was an increase in the use of  Till Numbers for payments. The increase was from 15.2 percent to 18.4 percent over the same period. However, the use of PayBills among MSEs declined slightly from 6.4 percent in October 2022 to 5.9 percent in June 2023. This was blamed on the reintroduction of transaction charges for PayBill in January 2023

These findings tally with the growth of M-PESA revenue by 8.8% to KES 117.2 billion in the FY 2022/2023

Indeed, it backs the Central Bank of Kenya (CBK) to increase the daily transaction limit for M-Pesa and Airtel money to KSH 500,000 per day. Among the age groups, the use of digital channels was higher among 18–25-year-olds than other age groups.

Digital Payment to Pay Suppliers

Despite the adoption of digital payment cash is still king. MSEs primarily use cash and mobile payment platforms to transact with their suppliers. The use of cash increased from 95.2 percent in October 2022 to 96.7 percent in June 2023. This was attributed to convenience and an increase in pay bill charges.

However, the use of mobile money by businesses to pay suppliers still increased. The use of Send Money increased from 60.8 to 65.9 percent. On the other hand, the use of mobile till number increased from 32.6 percent to 48.5 percent. The increase in the use of till numbers and mobile money could be attributed to low transaction costs, ease of use, availability, and increased interoperability.

The MSEs Tracker Survey was conducted by the Central Bank of Kenya in collaboration with the Kenya National Bureau of Statistics (KNBS) and Financial Sector Deepening Trust (FSD) Kenya.

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