Battle for control of Kenya's mobile money market is heating up as the country's biggest mobile network Safaricom has fired its latest salvo at Equity Bank.
On Tuesday, Safaricom announced it is slashing its M-Pesa transaction fees by up to 67% for users in "low and medium tiered bands" who typically transfer amounts ranging between KES10 to KES1,500."
Meanwhile, the Kenyan telecoms giant said tariffs for transfer amounts over KES1,501 are to be aggregated at 0.8% percent of the transaction value.
The tariff cuts; though, kick-in on 21 August: a day before the Communications Authority of Kenya (CA) hears a complaint by Safaricom against Kenyan banking giant Equity.
Safaricom alleges that Equity's planned use of paper-thin SIM card technology could endanger existing mobile money users with fraud risks. Equity has denied the merits of these allegations.
Equity Bank, which won a mobile virtual network operator (MVNO) licence in April this year, is preparing to take on M-Pesa by launching its paper-thin SIM cards that can be 'stuck' to existing SIM cards in phones.
Use of the technology means that Equity Bank mobile users won't have fork out additional cash to buy dual-SIM handsets.
Equity's entry into Kenya's mobile market could seriously threaten Safaricom's dominant grip on the country's mobile market. Safaricom has over 19 million M-Pesa users while Equity is the largest bank in East Africa with a customer base of over 8.7 million bank accounts and with over 50% of all bank accounts in Kenya.
But regardless of what the outcome of the CA's hearing is on Equity's paper-SIM tech, Safaricom has issued a pre-emptive strike by cutting its M-Pesa costs.
"It is our belief that by lowering the cost of these transactions we will provide an increased number of Kenyans with affordable access to basic financial services," said Safaricom's chief executive officer, Bob Collymore.
He added, "Our financial services portfolio now contributes close to 20% of our overall revenues and pushing through a tariff reduction of this magnitude is an expression of confidence in our longer term strategy to drive the growth of a cash-lite economy that delivers financial inclusion to millions of Kenyans through the convenience and affordability of our financial products."
M-Pesa was launched in 2007 and according to the Central Bank of Kenya statistics, the service has helped push the number of people in the formal financial fold to 83%.
Safaricom claims this figure would drop to 25% without M-Pesa.
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