In 2023, the Kenya Mobile Money industry experienced a drop in transaction values for both bill payments and bulk disbursements. There was an 11% decrease in the value of bill payments made through mobile money, reaching $75 billion in 2023.
In fact, bill payment values grew everywhere except for East Africa where they fell by 22%. Kenya was seen to have greatly influenced the regional decline. Similarly, the value of bulk disbursements fell by 1%, totaling $83.6 billion.
However, while values decreased, transaction volumes increased. There was a growth in transaction volumes between 2022 and 2023 for both consumer use cases. The number of bill payments made through mobile money in 2023 had a growth rate of 23%. Bulk disbursements also experienced an uptick, with a 10% rise in volume.
Mobile Money Regulations Influencing Consumers
For Kenya, the drop in transaction values for both bill payments and bulk disbursements are all attributed to regulatory changes.
At the start of the COVID-19 pandemic, the Central Bank of Kenya announced that it had waived fees for sending money between mobile money wallets and bank accounts. The reintroduction of bank-to-wallet transaction charges has influenced customer behaviour in the country.
Furthermore, consumer behaviour was greatly influenced by Safaricom’s M-Pesa hike in transaction charges. Following the enactment of the Finance Bill 2023, M-Pesa that has 96% market share, increased transaction charges by 15%. Today, Kenya’s mobile money tax is one of Africa’s highest.
Merchant payments have proven to be a key driver for mobile money use. KRA is now looking into businesses using Merchant Payment services and has been requesting information. This is part of a recent tax enforcement push by the revenue authority. This has made many small businesses choose cash payments again, fearing extra scrutiny.
However, it is important to note that mobile-to-mobile bill payments (e.g. Pochi La Biashara) continued to grow in 2023. Notably, these kinds of payments tend to be transactions of low value. As such, there was an overall decline in the value of bill payments in Kenya.
The industry was born in Kenya as a peer-to-peer service. Due to regulatory changes, scrutiny and new tax regimes, users are cutting back on use of traditional merchant payment services (e.g. Till Number) when possible.
According to the report by GSMA, there was also general drop in industry activity rates across Sub-Saharan Africa. A drop from 29.7% in 2022 to 28.1% in 2023 was registered in East Africa. This was the lowest post COVID-19 pandemic mobile money activity rate registered.
