Safaricom has announced a rate increase on bank to third party transfer services on its MPESA money transfer services, suggesting the need to discourage customers over security concerns.
Safaricom hopes bank customers would wish withdrawing funds from their accounts to their phones, before transferring the same to the intended beneficiaries.
“This new arrangement has to some level contributed to the raised risk profile of the bank to MPESA functionality especially in the case where a transaction was made under compromised or erroneous circumstances,” Safaricom said.
The higher MPESA rates may possibly drive banks to discontinue the transfer to third party functionality. The period ending November 2015 is meant to allow commercial banks time to seek approvals of the revised tariff from the industry regulator Central Bank of Kenya.
Safaricom promised to lower the MPESA rates for the transfer from the bank account to the individual’s mobile wallet account. It further said “In particular, there is a cause of concern where money is sent to a wrong MPESA account holder than was intended by a customer or where fraudulent transactions are made in favour of a third party MPESA account holder unknown to the customer,”
Such cases could happen when a bank customer is forced to withdraw funds from their account in an abduction incident. Though, from a revenues standpoint, a direct transfer from a bank account to a third party would yield less than the two cash transfers, first from the bank to the MPESA and onward to the secondary party.
Equity has accused Safaricom of subjectively increasing the mobile money transfer rates charged to Equitel’s consumers transferring money to Safaricom’s MPESA service as a way to slow down its money transfer service.
Safaricom also denies that the rate review had anything to do with the entry of Equity Bank into the money transfer services through its platform Equitel, contrary to public opinion.
Consumers of Equitel took to social media after finding out that the rates for sending money to MPESA had suddenly doubled without prior notice. Safaricom said, the revised rates would apply to all partner banks, in disputing Equity’s claim.
The revised MPESA rates will come to effect on December 1, 2015.