The use of credit and debit cards for purchasing goods and services in Kenya has reached its lowest point in six years, according to new data from the Central Bank of Kenya (CBK).
In the 10 months leading up to October 2024, the value of credit and debit card transactions dropped to Sh465.4 billion, a decrease from Sh533.4 billion in the same period last year. This decline follows a similar trend observed in previous years, with card transactions falling from Sh625.15 billion in 2021 and Sh517.7 billion in 2020.
Consumers are increasingly opting for alternative payment methods, with cash and mobile money transactions on the rise. Mobile transactions hit an all-time high of Sh7.2 trillion during the same period, up from Sh6.45 trillion in 2023. The rise in mobile payments reflects a broader trend towards digital financial services, with the number of registered mobile accounts reaching 81 million in October 2024, up from 76 million the previous year.
The growth in mobile money adoption is driven by factors including the convenience and lower costs associated with mobile payments, especially for micro, small, and medium-sized enterprises (MSMEs). Last year, the CBK approved increases in daily transaction limits and account caps for major telecommunications firms Safaricom, Telkom Kenya, and Airtel Kenya.
According to Business Daily, these changes have allowed businesses and consumers to take full advantage of mobile platforms, particularly in a tough economic environment where every transaction counts.
According to the latest FinAccess Household Survey by the CBK, mobile money has become the preferred payment method for most Kenyans, with 52.6% of the population now using mobile money daily, up from 23.6% in 2021. The survey, which covered 28,275 households across 1,885 Enumeration Areas, found that mobile banking through USSD (38.2%) and mobile banking apps (45.7%) far outpaced the use of point-of-sale (POS) or card swapping machines, which accounted for only 1.5% of the banking channels.
Urban residents are leading the shift, with 28.5% of city dwellers using Paybill services, compared to just 14.3% in rural areas. Interestingly, women have shown a stronger preference for mobile money services, likely due to their simplicity and accessibility.
The Kenyan government has capitalized on the growing reliance on mobile payments to enhance tax revenue collection. The increase in mobile money usage, which began during the Covid-19 pandemic when mobile transaction fees were lowered, has only accelerated as more consumers and businesses seek to minimize their reliance on cash and traditional card payments.
In a sign of the state’s commitment to promoting mobile payments, the CBK reinstated charges on mobile-to-bank transactions in January 2023, but at reduced rates compared to the previous tariffs. These efforts are part of a broader push to digitize the economy and improve financial inclusion across the country.
As cashless transactions become more integrated into daily life, the decline in card usage signals a permanent shift in how Kenyans are making payments, with mobile money platforms leading the way in this digital revolution.
