I&M Bank drops mobile transaction charges on high cost of living
I&M Bank has dropped transaction charges between bank and mobile after one-and-a-half months claiming customer sentiment was against the extra cost under the current inflationary times.
The cost of living has shot up in Kenya over a cocktail of factors including high food prices due to failed rains, increased cost of imports of oil, wheat and edible oil on depreciating national currencies, new taxes and pass-on effect on the increased cost of business.
Official data shows that inflation has eased slightly from December’s 9.1 percent to 9.0 percent in January.
I&M said the open-ended moratorium will help their customers heavily weighed down by the cost of living will allow the lender to consolidate its digital expansion by encouraging mobile banking and merchant deposits.
The payment ecosystem between mobile money wallets and bank accounts expanded significantly when the transaction charges were waived in March 2020 because of the COVID pandemic emergency measures.
“We believe this move will offer new and existing customers a huge relief during tough economic times and encourage more customers to transact on mobile,” said Head of Digital Business Michael Mwangi.
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Although Mr Mwangi said re-introduction of the charges has not dampened mobile transactions, the high charges have been unpopular with depositors some of who have reverted to cash transactions while others have sued lenders in court to scrap them.
The courts temporarily halted the charges before banks were allowed to resume levying the fees that will be crucial in expanding lenders non-interest incomes by the billions.
Free mobile money transfers were introduced at the onset of the Covid-19 outbreak by the Central Bank of Kenya (CBK) when the regulator also announced that all mobile money transactions below Kes1000 would be free.
Banks lobbied for a return of the charges after telcos were allowed to reintroduce charges on low value transactions as the pandemic tapered off arguing that bank to mobile transfers was a cost to the business and for shareholders to endorse spending money on digital innovation and security they needed a return.
In January, the regulator finally agreed to lift the cap on mobile to bank transactions charges but announced that levies imposed by banks for bank-to-mobile money transactions will be reduced by 45 percent.
