MPESA should have uniform on-net and off-net mobile money transfer charges – CA study

Safaricom, considered the market leader in Kenya’s telcoms industry, should not be charging its subscribers to make mobile money transactions to non-MPESA users as well as its own subscribers not registered on the MPESA platform according to proposals from a competition study conducted by Analysys Mason.

Commissioned by telcoms industry regulator CA in May 2016, the Telecommunications Competition Study proposes that Safaricom be prohibited from levying surcharges for transfers to unregistered users as well as cross-platform transfers.

(TOP: Customers being served by MPESA agents).

The study recommends that uniform fees should apply “for transfers to registered and unregistered users, including those of other platforms.”

Currently, transactions to other MPESA users attract significantly less charges compared to those going to Safaricom subscribers who are not registered on MPESA and those going to non-Safaricom numbers. For instance, it costs Kshs 44 to transfer between Kshs 101 to 500 from an MPESA user to a non-registered MPESA user while transferring the same amount between MPESA users only attracts a Kshs 11 charge. Again, one can transfer upto Kshs 100,000 to other MPESA accounts but only a maximum of Kshs 35,000 to Safaricom numbers that are not registered on the MPESA platform.

MPESA users have the ability to transfer upto Kshs 100 to other MPESA accounts for free but a registered MPESA user can’t make a similar transaction to a Safaricom number which is not registered on MPESA, meaning that transactions between registered MPESA accounts attract reduced rates.

The Analyssis Mason study, whose findings were released to stakeholders on February 20, 2018, also proposes that mobile money agents be allowed to support multiple mobile money platforms, a move that would allow them to offer services to subscribers of all the three telcos in the country – that is Safaricom, Airtel Kenya and Telkom – which is not the case at the moment.

“We have also identified a number of proposals to address other market barriers,” states the report, adding that: “(Industry players) should set up a system under which agents can support multiple mobile money platforms using a single float (but more a matter of banking regulation).”

In late January this year, the CA announced the start of a pilot between the country’s telcos to enable subcribers to send money to each other seamlessly across platforms – whether via MPESA, Airtel Money or Telkom’s yet-to-be-launched money transfer service, T-Kash – on their handsets.

The pilot is meant to allow the telcos to have  a seamless interaction of the mobile money services -technically referred as interoperability.

The pilot, which begin in early February between Safaricom and Airtel, follows a similar agreement by Tanzania’s mobile network operators – that is Airtel, Tigo and Zantel in June 2014. Telkom was expected to sign an agreement with the two other telcos – Safaricom and Airtel Kenya – by mid February.

According to the latest industry stats, which cover the period between July to September 2017, the number of active mobile money transfer subscriptions and registered agents stood at 28.1 million and 184,537 respectively. A total of 537.2 million transactions (sending and withdrawals) were made during the period, all valued at Kshs 1.65 trillion. Mobile commerce transactions which include Customer-to-Business (C2B), Business-to-Customer (B2C) and Business- to-Business (B2B) stood at 352.4 million and were valued at Kshs 714.3 billion. Person- to-Person (P2P) transfers amounted to Kshs 544.1 billion.

In terms of agent outlets, Safaricom accounted for over 148,000 outlets followed by Airtel Money with 14,000 agents. Telkom returned no agency numbers as its previous service, Orange Money, has since been deactivated as part of the rebranding and launch of a new platform, T-Kash.

The CA in May 2016 contracted UK-based Analysys Mason to undertake the study to establish the degree of competition and its effectiveness in the various telecommunications markets in Kenya.

Following its release, the Telecommunications Competition Study report will now be taken through a review through a process of public consultation. Afterwards, the final version, including a roadmap for implementation, will be then be adopted for implementation.

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