Cash money is now a reserve of M-PESA agents as Kenyans walk with empty wallets preferring to go cashless in a dramatic change brought by the experience during the Coronavirus pandemic.
Financial Sector Deepening Kenya says that cash outside banks was passed between mobile money agents at least three times in one month.
In January, this year, the value of cash either being deposited or cashed out through mobile money agents was the equivalent of 260 per cent of the value of currency outside of banks.
This is the equivalent of every shilling not in a bank passing through a mobile money agent 2.6 times.
Mobile money is safer than carrying cash from avoiding thieves or contact with contaminated bills especially during the Covid-19 pandemic.
Kenya’s love for mobile money has shot up over the past year following the move by the Central Bank of Kenya to encourage cashless systems by introducing the waiver of fees on transfer of less than Sh1000 and any amount of money from banks to mobile wallets.
CBK aimed at cutting down on the handling of cash and the attendant risk of Covid-19 being transmitted from person to person.
This was allowed to run until December 2020 when CBK lifted the moratorium but pressured Safaricom to cut low value M-PESA transaction fees by up to 45 per cent in line with a deal that ended the nine months of free transactions below Sh1000.
FSD says that between the periods January and March and October to December, 2020, the value of mobile money transfers nearly doubled.
During this period, customer to business (C2B) transfers increased 217 per cent.
Business to Business (B2B) transfers increased 94 per cent and person to person (P2P) transfers went up by 53 per cent.
“This indicates a significant shift in how people are choosing to pay for goods and services and may make a significant contribution to CBK’s vision of a cash-lite economy if the level of digital transfers can be maintained after the reintroduction of fees for low value payments and transfers,” FSD said.
This seems to be the case given that since the transaction charges were re-introduced the value of mobile money deposits and withdrawals in February 2021 was over 60 per cent higher than the same month in 2020.
The number of mobile money agents has increased over 30 per cent in the same period.