Safaricom Reviews M-MPESA Bands and Tariffs
Global leader in mobile money services Safaricom has announced a major tariff review of its M-PESA service, the first since the service was launched in 2007.
In a move geared towards increasing the number of Kenyans with access to basic financial services, registered M-PESA customers will now be able to send and receive amounts as low as KES10 with effect from today, against a previous limit of KES50, with charges for transfers within this band pegged at KES3. M-PESA customers can also now make micro-payments from as low as KES10 to KES49 per month.
At the same time, the company has lowered the transaction fees for its most popular value band of KES101 to KES500. The charge for this band, which accounts for over a quarter of all the transactions on the M-PESA platform, has been reduced from KES30 to KES25, in a move aimed at stimulating more transactions within the band.
Citing customer feedback, Safaricom CEO Bob Collymore said: “It was very clear to us when we undertook this tariff review that we were in a unique position to extend the benefits of financial inclusion to more Kenyans, particulary those in lower income groups who rely very heavily on our service. We are particulary concious of the fact that about seven in ten adults in Kenya now have access to some form of mobile money service and as the pioneers in this space, we have a specific role to ensure that our service remains affordable to everyone.”
The M-PESA tariff review also introduces 11 new tariff bands in a bid to rationalise the previous disparities between transaction amounts and charges levied for the same.
Commenting on this revision, Mr Collymore stated: “The good news is that we have introduced lower charges for smaller transactions, but at the same time we have had to increase the charges levied on the bigger amounts being transferred. This is motivated, in large part, by the need to give greater incentives to our growing agent network to embrace higher value transactions, while improving overall efficiency for our customers, particlarly float availability.”
More information here: http://safaricom.co.ke/index.php?id=1587
M-PESA TARIFF REVIEW RATIONALE
This is the first tariff review undertaken by M-PESA since launch in March, 2007. It is informed by a rich body of consumer insights built over the years and is intended to make the M-PESA platform affordable and more efficient. The review headlines a number of items as follows.
Increase in the number of transaction bands from eight to 19:
More choice in terms of bands for the customer on the amount that can be sent.
This is also expected to encourage trade using M-PESA, for instance, one can send small amounts of money several times to pay for goods if buyers do not have enough cash at the time.
Reduction in tariffs for the most popular band (Sh101 to Sh500):
Our analysis shows that this is the most popular transaction band, therefore a good number of customers will benefit from the reduction of charges.
We do not want to penalize the wananchi for transacting lower amounts.
We expect to have more transactions going through since the band is now more affordable.
Introduction of a new lowest band (KES10 to KES49):
Financial inclusion: through this new band, we are bringing more people into the mobile money network through M-PESA.
This may also encourage low value air-time purchase.
Low value transactions may also encourage trade using M-PESA e.g. one can send small amounts of money to pay for goods or in emergency situations. This was very much evident during last year’s Kenyans for Kenya initiative, in which the lowest denomination one could send was KES10.
Increase in tariffs for high denomination transactions:
This will promote equitability, i.e. previously customers paid a higher percentage for of the amount being sent while for higher bands they paid a much lower percentage of the transaction value. These have now been rationalised.
Agents are exposed to high risk handling high values.
This will encourage higher float availability, which has been a challenge on the channel.
It will also generally improve efficiency on the M-PESA platform.
M-PESA remains cheaper compared to other forms of money transfer e.g. the ones provided by banks like RTGS and bankers cheques.
[...] It is in this year that M-PESA became a house hold name in Kenya and Safaricom reported the 101-500 category as their most popular transaction [...]