Safaricom faces petition to decrease M-Pesa fees

Safaricom Restricted’s headquarters, Nairobi. PHOTO FILE | NMG

By VICTOR JUMA
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Abstract

• Telkom Kenya is looking for regulatory orders by Parliament to compel Safaricom to chop the charges it fees on its cellular cash service M-Pesa for money transfers to rival platforms.
• Telkom submitted that the usage of completely different tariffs has served to entrench the dominance of M-Pesa which has greater than 90 % share of the cellular cash market.
• The corporate says Safaricom’s pricing technique has helped it to draw extra clients and lock them in with little incentive to make use of various platforms.

Telkom Kenya is looking for regulatory orders by Parliament to compel Safaricom to chop the charges it fees on its cellular cash service M-Pesa for money transfers to rival platforms.

The nation’s largest telco at present has cheaper charges for transactions amongst its clients in comparison with these charged on cross-platform offers, which rival operators reckon is uncompetitive behaviour.

The proposal is amongst many which have been put ahead to the Senate Standing Committee on Data, Communication and Expertise by Safaricom’s rivals which argue that the corporate is dominant and should be reined in to stave off the collapse of rivals.

Expenses for transferring money from M-Pesa to clients of rival cellular cash platforms – described as “unregistered customers” — will be greater than 4 instances increased than charges amongst Safaricom’s clients.

Telkom submitted that the usage of completely different tariffs has served to entrench the dominance of M-Pesa – which has greater than 90 % share of the cellular cash market — and left rival platforms like Airtel Cash and T-Kash with no likelihood of catching up.

“Safaricom fees must be uniform for cross-platform cash transfers, in step with the AM suggestion, on each USSD [SMS-based technology] and STK [SIM card-enabled] transfers,” Telkom Kenya stated in its submission.

The corporate says Safaricom’s pricing technique has helped it to draw extra clients and lock them in with little incentive to make use of various platforms, perpetuating the so-called membership impact.

An M-Pesa buyer transferring Sh1,000 to a different particular person on the identical platform pays a price of Sh12 or 75.5 % lower than the Sh49 it prices to remit the identical worth to a recipient on a rival platform.

Transferring Sh10,000 from M-Pesa to a distinct cellular cash platform prices Sh205 or 2.3 instances the price on transactions amongst Safaricom clients.

M-Pesa clients can ship one another as much as Sh150,000 in a single transaction however the highest worth that may be remitted to a different platform is capped at Sh35,000.

In addition to ending what it phrases discriminatory pricing, Telkom Kenya additionally desires extra measures to be taken by regulators to reform Safaricom’s cellular cash enterprise.

“The related regulators, Central Financial institution of Kenya (CBK), Communications Authority of Kenya (CA) and Competitors Authority of Kenya (CAK) must co-operate and co-ordinate the implementation and enforcement of agent interoperability,” the telco stated.

“The CBK ought to set a agency deadline for full cellular cash interoperability and impose monetary incentives designed to make sure Safaricom co-operates in implementing agent interoperability by the required deadline.”

The corporate added that CBK must implement service provider and biller interoperability in addition to company interoperability. It additionally desires Safaricom to be damaged up into separate items providing cellular cash and telecommunications providers.

Telkom Kenya argues that Safaricom’s dominance throughout voice, cellular cash and different providers is so extreme that regulators must take motion to forestall the collapse or exit of rivals.

“Accordingly, software of competitors legislation alone wouldn’t adequately tackle the market failure(s) involved,” the corporate stated.

Safaricom, in its submissions to the identical committee, defended itself towards fees that it’s a dominant participant utilizing its outsize market energy to the detriment of rivals.

The corporate stated there was wholesome competitors within the trade and that any participant may construct its market share by elevated investments and innovation.

“Safaricom doesn’t have any market energy and due to this fact Safaricom can’t act independently of different gamers and shoppers,” the agency’s chief government, Peter Ndegwa, instructed the committee.

“It’s our place that there must be no hostile regulatory actions that will stifle the expansion the trade. There may be room for nice funding within the trade and we stay up for seeing extra funding by different gamers into the market.”

The submission got here days after Airtel instructed the identical committee that native regulators had been reluctant to declare Safaricom a dominant participant regardless of having a market share of greater than 50 %, a threshold that has triggered such designations in different markets.

The CAK and the CA have stated that Safaricom’s market share has declined in recent times and that competitors stays wholesome, a place the telco reiterated to the committee.

Airtel has argued that declaring Safaricom a dominant participant is step one to addressing the alleged uneven working atmosphere.

The second-largest telco additionally blamed the CA for skewed allocation of cellular spectrum in favour of Safaricom and failure to cut back the charges that cell phone operators cost one another for interconnecting calls.

Airtel additionally instructed the Senate committee that there was bias within the allocation of spectrum, with Safaricom holding rather more than its rivals.

“Regardless of investing closely within the community to enhance buyer expertise, we proceed to grapple with lack of spectrum particularly in 4G/LTE which, as suggested by the CA, is unavailable, but the dominant participant holds extreme spectrum,” Airtel stated.

Airtel’s petition to Parliament exhibits that it has been allotted 50 MHz of the spectrum in comparison with 82.5 MHz for Safaricom and 37.5 MHz for Telkom Kenya.

Safaricom’s submission didn’t tackle the declare of hogging spectrum however emphasised its enormous funding in infrastructure and cost of the most important company taxes within the nation.

Whereas Airtel has confused the the reason why Safaricom must be declared a dominant participant and remedial actions taken, Telkom Kenya argues that the smaller gamers are in such dire straits that the problem ought to transcend mere competitors legal guidelines and be tackled by proactive regulation.

“Though utilized on a restricted foundation, ex-ante regulation has a long-term impression on competitiveness of the sector by foreclosing exits, attracting new entrants and spurring investments by all,” Telkom Kenya stated.

“Put merely, ex-ante regulation calls for short-term sacrifices by corporations out there for the general client and financial welfare.”

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