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Big banks, telcos slow to heed order on fees disclosures

Big commercial banks and telecommunications firms are lagging behind in implementing a directive to disclose all fees incurred in mobile money transactions.

The Competition Authority of Kenya (CAK) says that eight companies are thus far making these disclosures to customers.

Airtel is the only mobile network operator that has complied with the order while Safaricom, Orange and Equitel remain missing from the list. Among Kenya’s seven tier one banks, all of which provide mobile banking services, only Co-operative Bank is complying with the order.

The other mobile money service providers that are making the required disclosures include Faulu Kenya, Bank of Africa, Family Bank, NIC Bank, Prime Bank and Mobikash.
The CAK attributes the delays in implementing the changes to technical hold-ups. The authority says that it is now engaging the firms individually with a plan to have the whole sector make the disclosures by June 2017.

Initially, the CAK had given the end of 2016 as the deadline for these companies to make the changes.

“We took into account the complexities of some of the systems and are approaching this issue on a case to case basis,” said CAK head of consumer protection, Mr Boniface Kamiti.

Safaricom had last year asked for an extension on the deadline saying that it would be unable to make the necessary changes until June this year.

The directive requires the companies to make changes to the way they provide services over mobile phone applications, Unstructured Supplementary Service Data (USSD) codes and SIM Card Toolkits.

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Gradual changes

Mr Kamiti says that some of the companies are making the changes gradually. For instance, by the end of the week Safaricom is expected to be providing disclosures on USSD services while changes to the SIM Card Toolkit are expected to take longer.

The directive was issued by the CAK amidst rising customer complaints about the lack of transparency associated with mobile money transactions.

The authority wanted to bring to an end a situation whereby many Kenyans only found out about the cost of transactions after the fact or had to rely on flyers and posters for such information.

The CAK’s is not the only attempt to reduce opacity in mobile transaction fees.  Amendments to the Kenya Information Communication Act in January made it mandatory for mobile phone companies to disclose the cost of premium rate services before the use of such services.

The economic lives of Kenyans are increasingly dependent on mobile phones. In the nine months to September 2016 the value of mobile money transactions stood at Sh2.46 trillion. Safaricom, the market-leader in mobile money technology, has become the most profitable company in the region partly due to the success of M-Pesa.

The success of M-Pesa has drawn the attention of other telecommunication companies and of banks. Equity Bank through its telecom brand Equitel, is now the second largest player in the mobile money market. A partnership with Safaricom on the mobile lending service M-Shwari has catapulted CBA to the first tier of Kenya’s banking sector.

Banks are now going after a chunk of the mobile money business more aggressively after getting approval from the Central Bank for their own mobile cash transfer system.  The Kenya Interbank Transaction Switch has been developed by KBA and is expected to pose competitive threat to Safaricom’s M-Pesa and Equity’s Equitel service.

mumumo@ke.nationmedia.com

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