Mobile money agents fear their businesses may be at stake following a move by the leading mobile operator to increase money transfer charges.
The agents are worried that the high costs may discourage consumers from using the service resulting in overall decline in business. Safaricom with a market share of about 63.2 per cent, announced last week it will raise mobile money charges for M-Pesa users starting tomorrow. Currently, M-Pesa has 15.2 million users. “Tariffs for all transactions bands from Sh101 and above will increase by approximately 10 per cent.
This translates into an increase of between Sh2.50 and Sh10 depending on the value of the transaction for person to person transfers,” said Safaricom Chief Executive Officer, Bob Collymore in a statement. However, Safaricom did not increase fees for transactions of between Sh10 and Sh100 to avoid hurting people who transfer such monies.
“In line with our commitment to deepen financial inclusion and access to basic financial services, Safaricom will not review the charges for money transfer transactions within Sh10 to Sh50 and Sh51 to Sh100 transaction bands,” said Collymore.
The company attributed the higher tariffs to increased tax effected by the Treasury as part of the plan to meet the rising public wage bill occasioned by salary increases for teachers, lecturers and doctors. “This review follows the publication of the Finance Act 2012, which introduces a 10 per cent excise duty on all transactions fees charged for money transfer services provided by mobile phone service providers, banks and money transfer agencies,” he added.
However, as Safaricom readies to ef- fect the changes, its rivals Airtel, Or- ange, and Yu, which also offer cash transfer services, are yet to announce tariff hikes. So is the independent cash transfer firm, Tangaza. This is what is worrying M-Pesa agents, who foresee consumers seeking services from their competitors. “All indications are clear that the tariff rise may make us lose business in the coming months. It always happens when costs increase.
It happened when Safaricom increased its call rates,” George Mogire, a mobile money agent in Nairobi said. Mogire, who runs a mobile money shop in the central business dis- trict, said consumers are not happy with the rise, which comes barely a few months after Safaricom revised upwards its charges. To send Sh101, M-Pesa users pay Sh55 as transactions fees. The money caters for sending and withdraw- ing fees, which are Sh30 and Sh25 respectively.
The figures will now go up by 10 per cent to Sh33 for send- ing cash and Sh27.50 for withdraw- ing, which will makes it uneconomical for most mobile money users. “Since the company announced that it will increase M-Pesa tariffs, I have not served any customer, who has not complained of the move.
One customer told me that he may be forced to start using our competi- tor’s services due to the increase,” said Mogire. Airtel, for instance, in a bid to increase its market share is offering “free money transfer serv- ices”, where subscribers only pay for withdrawing cash. “Certainly, the tariff rise is going to affect our business.
People are going to shun our cash transfer services and turn to other means of sending money,” said Mogire. Some of the ways people may turn to include direct bank deposits in peoples’ bank accounts. “This is what consumers used to do before mobile money became convenient.
Kenyans are price sensitive. Any increase in charges turns people off, making them to start looking for alternatives,” he said. His colleague Martin Mukuri said the tariff rise will worsen their plight since it has become difficult to run mobile money outlets as standalone shops.