Safaricom faces petition to lower M-Pesa charges

Safaricom faces petition to lower M-Pesa charges

Telkom Kenya is seeking regulatory orders through Parliament to compel Safaricom to cut the fees it charges on its mobile money service M-Pesa for cash transfers to rival platforms.

The country’s largest telco currently has cheaper rates for transactions among its customers compared to those charged on cross-platform deals, which rival operators reckon is uncompetitive behaviour.

The proposal is among many that have been put forward to the Senate Standing Committee on Information, Communication and Technology by Safaricom’s rivals which argue that the company is dominant and must be reined in to stave off the collapse of competitors.

Charges for transferring cash from M-Pesa to customers of rival mobile money platforms – described as “unregistered users” — can be more than four times higher than fees among Safaricom’s customers.

Telkom submitted that the use of different tariffs has served to entrench the dominance of M-Pesa – which has more than 90 percent share of the mobile money market — and left rival platforms like Airtel Money and T-Kash with no chance of catching up.

“Safaricom charges should be uniform for cross-platform money transfers, in line with the AM recommendation, on both USSD [SMS-based technology] and STK [SIM card-enabled] transfers,” Telkom Kenya said in its submission.

The company says Safaricom’s pricing strategy has helped it to attract more customers and lock them in with little incentive to use alternative platforms, perpetuating the so-called club effect.

An M-Pesa customer transferring Sh1,000 to another person on the same platform pays a fee of Sh12 or 75.5 percent less than the Sh49 it costs to remit the same value to a recipient on a rival platform.

Transferring Sh10,000 from M-Pesa to a different mobile money platform costs Sh205 or 2.3 times the fee on transactions among Safaricom customers.

M-Pesa customers can send each other up to Sh150,000 in a single transaction but the highest value that can be remitted to another platform is capped at Sh35,000.

Besides ending what it terms discriminatory pricing, Telkom Kenya also wants additional measures to be taken by regulators to reform Safaricom’s mobile money business.“The relevant regulators, Central Bank of Kenya (CBK), Communications Authority of Kenya (CA) and Competition Authority of Kenya (CAK) need to co-operate and co-ordinate the implementation and enforcement of agent interoperability,” the telco said.“The CBK should set a firm deadline for full mobile money interoperability and impose financial incentives designed to ensure Safaricom co-operates in implementing agent interoperability by the specified deadline.”The company added […]

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