Time flies with great content! Renew in to keep enjoying all our premium content.
Prime
Pesalink money transfer fee cuts spread to 19 banks in retail battle
Pesalink’s new pricing presents a cheaper option for low- to mid-value transactions within banks’ wallets, presenting competition in the retail transactions space.
The number of banks cutting Pesalink fees has nearly doubled to 19, as lenders roll out free transfers of up to Sh1,000 and a flat charge of Sh20 on larger transactions to attract retail payment flows.
The move, which represents a discount from the charges of up to Sh250 that customers have been paying for Pesalink transfers, aims at capturing a bigger share of person-to-person payments. The discounted price applies to any transaction from a participating financial institution to another.
The number of banks and microfinance banks who have agreed to the discounted tariff has risen from 10 in under two months and now includes five of the top 10 lenders in Kenya.
Absa Bank Kenya and Stanbic Bank Kenya have become the latest major banks to enrol, joining KCB Bank Kenya, Diamond Trust Bank and Prime Bank who had lowered the rates by mid May this year.
Other new entrants are HFCB, Victoria Commercial Bank, Access Bank Kenya, Citibank N.A Kenya, Commercial International Bank and Faulu Microfinance Bank.
Under the new model, transfers of up to Sh1,000 are free, while any amount above that up to Sh999,999 attracts a flat Sh20 fee regardless of value. The new tariff is a shift from tiered pricing that has traditionally characterised bank transfers.
The initiative, dubbed ‘Tuma Direct na Mbao,’ signals a co-ordinated effort by lenders to make bank-based transfers more attractive at a time when mobile money platforms such as M-Pesa continue to dominate everyday payments.
Safaricom’s M-Pesa, which dominates person-to-person mobile money transfers, charges tiered fees based on transaction value.
M-Pesa transfers of up to Sh100 are free, while those between Sh101 and Sh500 attract a fee of Sh7. Transactions ranging from Sh501 to Sh1,000 cost Sh33, with charges increasing progressively to Sh108 for the maximum permitted transfer of Sh250,000.
In comparison, Pesalink’s new pricing presents a cheaper option for low- to mid-value transactions within banks’ wallets, presenting competition in the retail transactions space. Banks have also been innovating in the payment space through pay bill numbers as opposed to the traditional card-based deals.
Completing the list of 19 players offering the reduced charges on Pesalink are GT Bank, SBM Bank, Paramount Bank, Credit Bank, Ecobank Kenya, Bank of Baroda, Choice Bank and Caritas Microfinance Bank.
Pesalink CEO Gituku Kirika said in May this year talks are ongoing to onboard more banks in a development that promises to boost person-to-person deals through banks. Among large banks, Equity Bank Kenya, Co-operative Bank of Kenya, Standard Chartered Bank Kenya, NCBA Bank Kenya and I&M Bank are yet to join.
Mr Kirika said the pricing overhaul is part of a broader strategy to make digital payments affordable, predictable and easier for consumers.
“We have been championing for a long time the reduction of the cost of payments and also the standardisation of it so that it is easier for consumers to understand what they are paying. We are talking to more players so that it becomes an industry-wide price that can ride on volumes,” he said.
Banks are seeking to claw back transaction volumes from mobile money services, particularly in the person-to-person segment where convenience and cost have historically tilted the market in favour of telcos.
Pesalink, operated by Integrated Payment Services Limited under the Kenya Bankers Association, has evolved into an instant payment switch connecting more than 195 financial institutions, including banks, saccos and fintech wallets. The platform is also expanding its reach to telcos as part of a broader push towards interoperability.
Currently, the system processes over one million transactions monthly, with the value of daily transactions being between Sh5 billion and Sh6 billion.
Pesalink is also working to simplify transactions, particularly in addressing the complexity associated with bank transfers that require detailed account information.
The sector plans to switch to simpler identifiers such as mobile phone numbers or identity card numbers instead of bank account details that are cumbersome to master.
