Kenyan court pauses resumption of M-Pesa charges

Kenya’s High Court asked the Central Bank and Safaricom, the country’s largest telco to suspend the re-introduction of charges on transactions made between mobile money wallets and banks pending the resolution of a suit alleging that the charges infringed upon the rights of Kenyans.

In March 2020, the Central Bank of Kenya asked commercial banks to suspend the fees it charged customers who received money from M-pesa the popular mobile money service. The suspension was part of the emergency measures that were put in place to encourage the use of mobile money instead of cash as the Covid-19 pandemic forced residents and businesses into lockdowns.

Early in December last year, however, the central bank permitted Safaricom and banks to resume deducting money from customers who transfer money between their mobile money wallets and their bank accounts. Banks in Kenya had long asked the financial regulator to allow them to resume the deductions. 

At the time, the central bank said the fees charged would be reduced by 61% for transfers from bank accounts to mobile money wallets. Transfers from mobile money wallets like M-pesa owned by Safaricom to bank accounts would be reduced by 47%.

In a separate statement late in December 2022, Safaricom in a separate statement announced a slew of tariff reductions. Including M-Pesa Paybill charges which like wallet-to-bank account charges, was reduced by 47%. 

The reduced deductions were due to begin on the 1st of January, but have now been suspended after a Nairobi resident, simply identified as Moses Walufa by local media, filed a suit against the Central Bank of Kenya and Safaricom.

In his application, Walufa asserted that charges incurred in transaction services should not be passed unto customers but should instead be paid by Safaricom’s primary clients such as banks, utilities and government agencies.

Local media reported Walufa as contending that, “The petition pending determination illustrates that the engagement between Safaricom and its Mpesa Paybill clients (such as banks, government agencies, Kenya Power, DSTV, betting companies, mobile money companies, and other institutions) is a bipartite business engagement between Safaricom as the M-Pesa paybill service provider and their M-Pesa paybill primary clients being the service recipients.” As such, he claimed that mobile money wallet users should not be charged for using the service to make payments between Safaricom and its clients. 

The court will hear the case on Monday, 23rd January 2023.