The value of cash handled by mobile money agents during the first quarter ended March dropped by 12.1 percent to Sh2.04 trillion, despite a 38.1 percent increase in the number of transactions, pointing to a tough economy that is forcing more people into low-value commercial and personal deals.
Fresh data from the Kenya National Bureau of Statistics (KNBS) shows that the value dipped from Sh2.32 trillion a year earlier, while the volume of transactions grew from 632.7 million to 873.9 million.
The performance also suggests that more high-value transactions previously handled by agents could be shifting to rival service providers like banks.
Previously, mobile money subscribers relied heavily on agents to deposit cash, but those with bank accounts can now transfer money directly into their mobile wallets. This change in performance in the first quarter also comes amid the increased popularity of low-value transactions, which are free of charge.
Those sending money in small amounts of less than Sh100 in multiple transactions are able to avoid charges, which range from a few shillings to hundreds of shillings.
These small transactions are popular for person-to-person deals such as sending money to relatives or paying for low-value goods and services.
It can take a mobile money subscriber a few minutes to send hundreds of shillings in transactions of Sh100 each, thereby avoiding the fees charged by banks and telcos. However, sending cash within the Airtel Money ecosystem is free, although the platform has a smaller market share compared to Safaricom, the leader in the mobile money space with a slice of more than 90 percent by value.
During the period under review, the number of mobile money subscriptions rose by 7.27 million to hit 85 million. Additionally, 89,389 new active agents were added, bringing the total number to 410,115.
The current dip in the value of transactions reverses a rebound witnessed during the full year ended last December, when it grew by 9.4 percent to Sh8.7 trillion, compared to Sh7.95 trillion in 2023.
It also defies the growth trend witnessed after Airtel Money scrapped a code that forced customers on its e-money platform to withdraw cash within a week of receipt or have the funds returned to the sender.
The use of mobile payments skyrocketed at the onset of the Covid-19 pandemic in March 2020, following a waiver on charges for low-value transactions in an attempt to reduce cash usage as a precautionary measure to curb the spread of the disease.
At the time, the Central Bank of Kenya also waived charges on transactions between mobile money wallets and bank accounts.
The apex bank, however, reinstated the charges on January 1, 2023, but at reduced tariffs, stating that the waiver had achieved its target of growing mobile money usage and protecting users from high transaction charges.
The popularity of mobile money has, in successive years, remained on the rise, buoyed by enhanced network coverage by the telcos, in addition to the ease at which subscribers can send and receive money.
