High Court Halts Bank-to-M-Pesa Transaction Charges

The High Court has ordered Safaricom and the central bank to halt the re-introduction of charges on transactions made between mobile money wallets and lenders pending the determination of a suit involving financial consumer rights.

The court’s decision follows a legal challenge filed by Kenyan citizen Moses Wafula against the reintroduction of the charges, which were suspended in 2020 because of the Covid-19 pandemic. Wafula argues that the charges should not be passed on to consumers. In his application, he requested that the court halt the charges, stating that if the court later determines that the M-Pesa charges are unlawful, it would be difficult to recover the funds lost by the public and ask the banks to reimburse it.

He claims that his own rights and those of other Kenyans have been violated, infringed upon, and continue to be at risk due to the directive issued by the Central Bank of Kenya (CBK) and the actions of Safaricom. He argues that the charges for transaction services should be paid by Safaricom’s primary clients such as banks and not passed on to consumers.

“The petition pending determination illustrates that the engagement between Safaricom and its Mpesa Paybill clients (such as banks, government agencies, Kenya Power, DSTV, betting companies, mobile money companies, and other institutions) is a bipartite business engagement between Safaricom as the M-Pesa paybill service provider and their M-Pesa paybill primary clients being the service recipients,” he says.

The new charges were scheduled to be implemented on January 1, 2023. The Central Bank of Kenya (CBK) announced the reintroduction of the charges in December 2022 as a way to provide relief for commercial banks who have been critical of the regulator’s reluctance to reintroduce the fees.

However, the regulator said the new charges would be lower than the previous charges that were in effect before the suspension. The Central Bank of Kenya (CBK) stated that the maximum charges for transfers from bank accounts to mobile money wallets would be reduced by up to 61% and for mobile money wallets to bank accounts by up to 47%. The charges were suspended on March 16, 2020 as a part of the emergency measures to promote the use of mobile money during the peak of the Covid-19 pandemic.