Safaricom expects M-Pesa price cuts to end soon

Safaricom expects M-Pesa price cuts to end soon

Welcome news for Kenyan operator Safaricom, though possibly less so for its customers, is that coronavirus-related price cuts affecting its mobile payment business may end soon.

In fact, according to a statement by its CEO Peter Ndegwa, reported by Reuters, the operator expects M-Pesa price curbs to be lifted by the end of the year.

As regular readers will know, Safaricom complied earlier this year with central bank requests to remove all charges on small peer-to-peer transfers in March. The bank also directed commercial banks to remove charges on customers’ cash transfers to mobile wallets until the end of the year.

While encouraging cashless payments and helping to limit unnecessary contact during the Covid-19 pandemic were the aims, the earnings of both Safaricom and the banks have taken a big hit since the charges were removed.

As we reported last month, Safaricom and the country’s banks had been hoping that the Central Bank of Kenya would involve them in any decision on extending free transaction rules beyond the end of the year.

Safaricom CEO Ndegwa now seems confident that this will not be necessary, although talks with the central bank are apparently ongoing. On the upside – for consumers at least – the company may yet cut prices for some M-Pesa services after volumes rose significantly during the pandemic.

Reuters also reports that Safaricom is offering 60,000 customers financing to buy 4G phones in an effort to boost data usage and make up for the recent drop in M-Pesa revenues. More than half of Safaricom customers’ use 2G.

However, M-Pesa will no doubt continue to play a central role in the company’s plans. As a fantastically successful and popular system used to send money, save, borrow and make payments for goods and services, it apparently boasts around nearly 27 million active users out of a Kenyan population estimated in 2019 at 47.6 million.