Uncovering the Truth About Mobile Money Transaction Costs: Affordable and Accessible

Let this message go out to all desktop analysts on the issues of mobile money costs across the world, "mpesa" transaction costs are not expensive and neither are they impoverishing the Kenyan or slowing down the uptake.

It is foolhardy for someone who have not engaged with an ecosystem to declare themselves the authority on it and then arrogantly develop a solution.

This will be my 4th article on the issue of mobile money in general and mpesa in particular, it too will go against the grain of the narrative preached by clueless foreigners sitting in shared office spaces usually along Ngong and Lenana Roads.

Unlike many others who keep commenting on the issue of mobile money transaction fees, I interact with the so called "mwanainchi" on a regular basis which therefore makes me an authority on what I am about to debunk.

Over the past ten or more years I have read of startups being heavily funded to solve the problem of high mobile money transfer fees while others target the so called predatory mobile lenders and I keep wondering who they spoke to that told them that it was a problem needing solving, profitably.

As I look around today, there isn't a single one of the startups still in existence which raises the question of what was the true objective of the "investors" but I digress.

Since the Covid shenanigans, while travelling in matatus (that is what we call our quasi formal public transport system) around and within the city of Nairobi I would notice that a number of passengers were paying for the fare using "mpesa" and everytime the makanga (that is the public transport conductor) would say;

"ongezea kumi ya kutoa" (add an additional 10/- transaction/processing fee)

It had become so common that I had stopped noticing the frequent exchanges between the makanga and the passengers apart from when the former would get all riled up when a large number of passengers opted to pay using "mpesa".

All that was until a few days ago when I saw a sticker in a matatu declaring that the transaction fee was now official and not just one of those charges added in a ad-hoc manner to fares from "kunanyesha" to "hizi maandamano".

Translation:

We accept: Payment via "mpesa" mobile money

Include an additional 10/- transaction fee,

After you send, show me the "mpesa" transaction confirmation message

What this means is that the additional transaction fee is official and has been approved by the vehicle owner and the SACCO aka management company.

For context note that the 10/- is a flat rate irrespective of the amount being transferred, in the case of the route I usually ply that would be on the 70/- fare making the transaction fee 14% of the transaction amount.

If the passenger had alternatively withdrawn 100/- from an mpesa agent the fee would have been 10% and if they had withdrawn 500/- it would be 5.4% yet the passenger has no issue paying 14% to avoid the hustle of carrying cash.

If you google "mpesa charges" you will get hundreds of reports ranging from the World Bank to some nondescript expert sitting in some Silicon Valley garage claiming that the transaction fees are exorbitant thus affecting the penetration of digital payment.

The willingness by the consumers to pay an additional 9% for the convenience of not carrying cash means that the cost of the transactions isn't a deterrent and therefore offers no opportunity for the development of a solution.

If the situation had remained the same I would not be writing this article but more recently I was in a matatu that was charging a fare of 20/- yet a majority of the passengers opted to pay using "mpesa" even though there was an additional 10/- transaction fee, if you did not notice that is 50% on the fare price.

If you were me, what would you tell a person who claims that the cost of digital payment transactions in Kenya is restrictively high and pedatory?

Please share the response in the comments so that I can pass them on to the so called experts.

The morning before penning this article I boarded a matatu to a direction that I do not usually ply and since I was planning to write this article I decided that I would pay my fare using "mpesa" and was open to incurring the usual additional 10/- transaction charge.

When I asked the makanga if I need to include "ya kutoa" to my 20/- fare he said no and proceeded to tell me to make the payment to his mobile money business account known as Pochi la Biashara (business wallet).

This threw a spanner into the works of the article I was looking to write which was to show how the cost of digital payments was not a hindrance to adoption by the consumer but instead what is my take away is that it is possible to pay someone to change their behaviour.

With the makanga taking the effort to register an official mpesa business wallet and then relinguishing the opportunity to make an additional 10/- or more all in the name of reducing the hustle of looking for change indicates that the Kenyan remains as peculiar as ever.

Now to see if we shall apply the same strategy to get our kiosk owners to accept "mpesa" as a payment method without requesting for an additional transaction fee.