Safaricom lost the bid to cap the free M-Pesa transactions to five per user after subscribers split high-value transfers to avoid paying transfer fees, costing it billions of shillings in revenues.
The telecoms operator petitioned the Central Bank of Kenya (CBK) to cap the number of multiple transactions between two numbers, according to a recent disclosure of conference call transcripts between Safaricom and investors seen by the Business Daily.
Safaricom reported that customers were splitting high-value money transfers of as high as Sh60,000 to deals of below Sh1,000, allowing them to enjoy a free service that ideally would have cost them Sh105.
Under the CBK directive, mobile money transaction fees under Sh1,000 are free, with banks removing charges for customers moving cash between their mobile wallets and bank accounts.
Safaricom had also asked the banking regulator to lower the threshold for free mobile money transaction from Sh1, 000 to Sh500 to cut revenue losses estimated at Sh1.7 billion monthly.
But the CBK on June 24 extended the waiver on mobile money transaction fees under Sh1,000 for another six months after the initial 90-day period lapsed, a move that could see Safaricom lose up to Sh15.3 billion.
Safaricom was not consulted
Executives at Safaricom, who did not want to come on record, were concerned that the CBK didn’t consult the firms ahead of the announcement extending the free transfer to December after the lapse of the initial waiver period in mid-July.
“All I can say is that the CBK reviewed the emergency measures that were put in place and came out with the determination that we said. We are not in the business of having public discourses about some of these things,” said CBK Governor Patrick Njoroge.