Free cash transfers take Ksh.6billion from Safaricoms M-Pesa purse

The roll out of free mobile money transactions has punched a Ksh.6.1 billion revenue hole in Safaricom’s M-Pesa service in six months to September 30.

According to the telco operator half year results released earlier on Monday, the impact of free fees cut revenues from transfers by 32.1 percent or an equivalent Ksh.4.5 billion while streams from payment shrunk by 23.2 percent or a respective Ksh.1.6 billion.

Cumulatively, M-Pesa revenues were down 14.5 per cent year on year at Ksh.35.9 billion from Ksh.42 billon last year.

The free cash transfers have nevertheless occasioned accelerated digital transactions as earlier evidenced by Central Bank of Kenya (CBK) data.

For instance, the value of M-Pesa transactions in the period rose by a significant 32.9 per cent to a record Ksh.9 trillion from Ksh.6.8 trillion last year.

This as the value of deposits, transfers and payments grew by 27.8, 23.4 and 59 per cent or a combined equivalent of Ksh.1.5 trillion.

It’s from this velocity that Safaricom PLC Chief Executive Officer Peter Ndegwa indicated the underlying growth of M-Pesa remains strong in spite of the 14.5 per cent revenue slide.

“The actual M-Pesa is in great health, we have seen a great increase in customer numbers. We have also had a number of improvements in the underlying products offered. We are focusing on innovations around MSMEs and have launched several products,” he said.

With the looming return of fees for transfers below Ksh.1000, the telco operator can expect to mark a rebound in overall M-Pesa revenues.

The waiver which expires on December 31 is currently the subject of review by the CBK.

While Safaricom had previously predicted a Ksh.19 billion hit in revenues from the zero-rated transactions, the impact to September appears to be lesser than earlier thought.

“We do intend to charge at some point but are not ready at this stage to announce when this stage will be,” added Ndegwa.

According to Safaricom Acting Chief Finance Officer Ilanna Darcy, the turnaround from a zero-rated regime would be instant even but the change in customer behaviour would be uncertain.

“Consumers have gotten used to the zero-rated transactions. What is not known is what happens when we go back to the charges in terms of volumes. Will people continue using M-Pesa services? Will people be going back to cash? This is hard to say at the moment,” she said.

Mobile cash transfers below Ksh.1000 were waived on March 16 triggering a significance switch to digital transaction as part of measures to support cashless payments during the pandemic.

According to data from the CBK, the volume of daily mobile money transactions rose by 9.4 per cent in just one moth from the zero rating of transfers below Ksh.1000.