Mobile money is the biggest beneficiary of the monetary policies that have been put in place to help Kenyans survive the COVID-19 pandemic. To start with, the Central Bank of Kenya negotiated with mobile money service providers to waive transaction fees for all transactions up to KShs 1,000.

Secondly, money transfer to and from banks to mobile money services is now free in Kenya. Also, businesses and people are being asked to adopt mobile money as a means of payment, thus more people are more open to accepting to be paid amounts as low as KShs 10 via mobile money.

Why are these mobile money changes in Kenya significant?

At the moment, mobile money transactions of KShs 1,000 and below form a sizeable proportion of all M-PESA transactions.

One of the reasons people avoid making any payments that exceed KShs 100 by M-PESA is because of the transaction fees. Sending KShs 500 costs KShs 27, more than 5% of the amount being sent. This has always been deterrence and with the costs scrapped, people are warming up to the idea that mobile money can work everywhere.

Already, I have gone for more than three weeks without using cash, entirely relying on mobile money.

The good thing?

It has cost me nothing in terms of transaction charges. I have been able to move money from bank to mobile wallet and vice versa, instead of withdrawing from an ATM then depositing into mobile money to cut on costs. This has saved me time and money, and I hope it can be like this for a long time. Previously, banks and mobile money service providers had put barriers to money transfers across their platforms in an attempt to retain money within their platforms, which ended up hurting consumers.

The adoption of mobile money for small payments should be a game-changer in the long run. While mobile money is thriving in Kenya, it majorly works as a means of sending money, but not efficient for paying small amounts of money due to associated costs.

This time Kenya is likely to see a big cultural shift towards accepting mobile money as a primary means of payment.

New mobile money policies in Kenya claim casualties

However, the free money transfer is already claiming some casualties.

Safaricom has announced that it would incur a loss of Kshs 5.5 billion through three months in terms of lost transaction fees, which is about 7.3% of all the M-PESA revenue. On the other hand, other mobile money providers could gain from increased mobile money usage since free banks to mobile money transfer reduce the need for a strong agency network which they lack.

However, it is yet to be seen if they will take advantage of that.

The future of mobile money in Kenya

It takes long before a new technology can transform a culture, or a culture can align itself to a new technology.

It took years for factories to switch from one giant motor to many small motors when electric motors were invented, often relying on one centralized motor as they had done with steam power. Even computers took long before they started to transform workplaces, with calculators being used and results being fed into excel sheets.

Maybe this is the time when mobile money is going to take root in Kenya.

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