Safaricom Drops Some M-pesa Charges As It Posts U.S.$239.3 Million Profit

By James Anyanzwa

Kenya's mobile phone operator Safaricom has scrapped charges on money transfers through its M-pesa platform for transactions valued below Ksh 100($1).

The decision seen as an attempt to win customer loyalty in the face of increasing competition in the mobile money business will see the telco forego Ksh500 million ($5 million) worth of revenues per year

The announcement was made at the company's investor briefing in Nairobi earlier Friday.

The telco, whose profit for the six months to September 30 jumped 32.36 per cent to Ksh 23.93 billion ($239.3 million) has also waived fees on payments through its cashless Lipa na M-pesa channel for transactions below Ksh100 ($1).

The company said its latest decision is meant to empower small traders and micro agents who form a bulk of its network.

"Delivering our financial inclusion agenda remains at the core of our strategy to transform lives. We have listened to our customers and we have reviewed charges for person-to-person and Lipa Na M-Pesa transactions under Ksh100 ($1)," said Bob Collymore, the company's chief Executive said.

"Under the "M-PESA Kadogo" it will be free to send values of $1 and below. We shall continue to grow the adoption of savings and uptake of loans through the M-Pesa and grow cashless business payments and transactions," added Collymore.

Commissions

However, charges for withdrawals of similar amounts through the agents remain unchanged, though a customer cannot withdraw less than Ksh50 ($0.5) at an M-pesa agent outlet.

M-pesa charges are effected from a minimum of Ksh 10($0.1) to Ksh 70,000($700) transaction.

Safaricom introduced its Lipa na M-pesa platform in June 2013, charging traders 1.5 per cent for receiving money through the channel before reducing the commission to one per cent.

However customers pay different fees for using the Lipa na M-pesa service. For instance those buying fuel pay a 0.5 per cent commission on the value of every payment made.

Last year (2015) Equity Bank entered the mobile money transfer business through its mobile virtual network operator (MVNO) Equitel that provides for free cash transfer between customers on the same network.

In October, the bank also launched EazzyPay, a service that allows customers to pay for goods and services from their Equitel lines.

Mpesa revenues

Safaricom, which is listed on the Nairobi Securities Exchange(NSE) recorded a 32.36 per cent growth in net earnings for the six months ended September 30 2016 to Ksh23.93 billion($239.3 million) buoyed by M-Pesa and mobile data revenues.

According to the interim financial statement, M-pesa revenues grew 33.7 per cent to Ksh25.9 billion ($259 million) driven by 12.2 per cent increase in 30-day active M-Pesa customers to 17.6 million and a 38.4 per cent growth in monthly usage per customer to 9.3 transactions per month.

Mobile data revenue rose 46.3 per cent to Ksh 13.4 billion($134 million) helped by a 13.7 per cent growth in 30 day active mobile data customers to 14.9 million, increased bundle users and smartphone penetration.

Safaricom stock is currently trading at around Ksh21.25 ($0.21) per share compared to the initial public offering (IPO) price of ksh5 ($0.05) per share in 2008.

SOURCE: THE EAST AFRICAN