M-Pesa takes a hit from zero-rated mobile money payments
After transaction costs for mobile money P2P payments of Kshs 1000 or less were scrapped, Safaricom has witnessed a 14.5% year-on-year decline in M-Pesa revenue for the half-year 2020/21 period.
Safaricom CEO Peter Ndegwa said the cost incurred by the company amounts to Kshs 9 billion from when it halted fees in March to end of September 2020.
Ndegwa reiterated that the initiative was introduced to support Kenyans as the government discouraged the use of cash to encourage social distancing amid COVID-19.
He added: “It is still unclear when we will re-introduce the P2P charges, we are still in talks with the Central Bank of Kenya.”
Ilanna Darcy, Interim Chief Financial Officer at Safaricom said it is difficult to predict how consumers would respond to the charges being reintroduced. “Customers have gotten used to free transactions, and we don’t know if they will go back to cash. (But) it will be a little hard to say at this time.”
Ndegwa said despite the adverse effects of the pandemic, the M-Pesa product is still growing.
According to the company’s results, the total value payments for M-Pesa stood at Kshs 5 trillion in Q2 of the 2020/21 full year from Kshs 3.8 trillion in the first quarter.
However the decline in M-Pesa revenue did impact the company’s net revenue with Safaricom reporting an intake of Kshs 33 billion, down from Kshs 35 billion reported during the same period last year, representing a 6% decline.
However, fixed data and mobile data grew in the same period due to the demand for data encouraged by work from home initiatives during COVID-19.
“The growth in mobile data in the second quarter, more than offset the decline in voice, with data increasing by 1.2 billion shillings in the quarter while voice declined by 0.7 billion shillings,” Darcy reported.
Safaricom is continuing with its plan to establish 100% 4G coverage across Kenya by December 2020. It adds that it will target the ten million Kenyans still using 2G enabled phones to upgrade to 4G devices.