A bold decision by leading telco Safaricom to waive fees on small-value M-PESA transactions during the COVID-19 crisis has triggered a dramatic fourfold rise in usage of the mobile money platform over the past five years.
Marking five years in leadership, Safaricom CEO Dr. Peter Ndegwa recently reflected on how the company’s pricing overhaul, implemented in response to the Central Bank of Kenya’s request, not only cushioned Kenyans during the pandemic but also transformed M-PESA into a much more embedded part of daily life.
At the onset of the health crisis, the Central Bank urged mobile money operators to eliminate charges on transactions below Ksh 1,000 and on all bank-to-wallet transfers to reduce cash handling and curb viral spread.
“When we reintroduced charges post-COVID, we didn’t revert to old pricing,” Dr. Ndegwa noted.
“We significantly cut transaction fees, on average by 50 percent.”
Safaricom also opted to permanently zero-rate all transfers of Ksh 100 or less between individuals, as well as payments of Ksh 200 or below to merchants, amounts typically used for basic goods, kiosk purchases, and short public transport rides.
The impact has been noteworthy as by the last financial year, 58% of all M-PESA transactions were free.
Yet despite this, the volume of paid transactions per user has tripled.
“Even though more transactions are free, customers are using M-PESA three to four times more than before,” said Ndegwa, affirming how affordability has driven engagement.
Last year, M-PESA contributed 44% of Safaricom’s total revenue, a testament to how a pro-consumer pricing model can scale both access and profitability in digital finance.
