In 2024, rising transaction costs and elevated scrutiny by authorities authorities, together with the Kenya Income Authority (KRA), prompted extra retailers to shift to money. In line with Monetary Sector Deepening Kenya, money accounts for 80% of each day transactions in Kenya.
Small store operators informed TechCabal that they have been now accepting money over fears that KRA might use cell cash transactions to compel them to pay extra taxes.
Is M-Pesa’s grip on cell funds loosening?
May M-Pesa dominance in Kenya’s funds ecosystem face disruption? The reply is determined by whom you ask. Nevertheless, information from the Communications Authority of Kenya (CA) and the Central Financial institution of Kenya (CBK) present that the telco’s iron grip on funds stays unshaken for now.
Whereas rivals similar to Airtel Cash, business banks, and funds startups, are intensifying their efforts to disrupt M-Pesa’s reign, Safaricom’s place stays formidable. These opponents are closely investing in infrastructure, advertising and marketing, and revolutionary merchandise to seize a bigger share of the cell funds market.
One of the vital vital challengers to M-Pesa’s market dominance is Pesalink, a platform that enables real-time transfers to 39 business banks. Pesalink affords a horny various for shoppers in search of to conduct small money transactions with out counting on M-Pesa. Moreover, with decrease transaction charges and enhanced cell cash interoperability in 2024, Airtel Cash has additionally been gaining floor.
Airtel Cash’s market share grew from 2.8% to six.6% within the 12 months to June 2024. It’s a notable shift within the cell funds panorama, signaling a softening of M-Pesa’s once-absolute dominance, which nonetheless instructions 93.4% of the market.
Cellular cash
In complete, Safaricom and Airtel processed over 25 billion transactions with an estimated worth surpassing $309.4 billion (KES40 trillion) between January and October 2024. M-Pesa and Airtel Cash stay the fee platforms of alternative, particularly for Kenya’s unbanked inhabitants. These platforms have grow to be indispensable, particularly for money transfers in rural areas.
Neighbourhood retailers and small companies are more and more utilizing each platforms for accepting funds, dealing with provider transactions and paying utility payments for companies like water and electrical energy. Day by day transaction limits of as much as $3868 (KES500,000), make M-Pesa and Airtel Cash ultimate for small-to-medium sized transactions.
Cheques and RTGS
Whereas cell cash is dominant, conventional strategies like cheques and the Actual-Time Gross Fee System (RTGS) nonetheless play an important function in giant transactions. From January to October 2024, cheques valued at $15.4 billion (KES2 trillion) have been cleared, whereas RTGS transactions accounted for $21.6 billion (KES2.8 trillion).
Nevertheless, the usage of cheques is on the decline. In June 2024, the worth of cheques dropped 15.1%, virtually matching the Covid-19 interval when companies remained closed following anti-government protests.
Card transactions: Slowing progress in a mobile-centric economic system
The expansion of card funds in Kenya has been sluggish. Within the 10 months resulting in October 2024, complete card transactions—together with POS funds and ATM withdrawals—amounted to $355.8 million (KES 46 billion). Whereas this determine is substantial, it lags behind cell cash, reflecting Kenya’s robust choice for cell wallets.
Debit playing cards stay the most well-liked playing cards within the nation whereas bank card penetration stands at 5.6%.