CBK to reduce the cost of digital transactions

According to the Central Bank of Kenya (CBK), Kenya has unnecessarily high transaction charges for digital payments, with some of them being unclear to many customers.

CBK governor Patrick Njoroge said the regulator will collaborate with other stakeholders to lay out pricing policies to cushion customers with the launch of the National Payments Strategy 2022-2025.

He went on to say that the lack of an effective and easy-to-use procedure for dealing with price-related issues, especially on digital platforms, has harmed trust.

“While the recent improvements in various payments channels have been commendable, the same has not been reflected in terms of pricing of various payments services.” CBK governor.

High cross-network transfer costs

Customers using digital wallets and mobile money continue to pay significant transactional fees, particularly for cross-network transfers.

On Safaricom’s M-Pesa, Kenya’s biggest mobile money provider with more than 90% market share, withdrawals of between Sh50 and Sh150,000 cost an average of between Sh10 and Sh300.

These fees range from 0.2 to 26.7% of the total money transacted, depending on the amount.

Sending money to other registered users on the platform costs between Sh6 and Sh105 for quantities between Sh100 and Sh150,000.

M-Pesa allows senders to transmit up to Sh35,000 to non-registered recipients for a fee ranging from Sh45 to Sh309.

Withdrawal fees on the Airtel Money platform range from Sh9 to Sh270 for sums between Sh50 and Sh150,000.

Airtel Money users can send money to one other for free, whereas transfers to other networks cost between Sh6 and Sh105 for sums between Sh101 and Sh150,000.

For withdrawals between Sh50 and Sh150,000, Telkom’s T-Kash charges between Sh10 and Sh295; transferring money to other registered customers costs between Sh5 and Sh100.

Sending cash to non-registered users on the Telkom network costs between Sh36 and Sh285, with a limit of Sh35,000 per transaction.

CBK plans to establish Central bank digital currency (CBDC), a virtual currency that will be exchangeable one-to-one with physical cash, to reduce exorbitant transaction fees.

It will function similarly to other mobile money products on the market, but with the primary goal of lowering costs and simplifying transactions across several platforms.

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