The cost of handling cash for businesses has this year reduced due to the value of payments effected through mobile phone, plastic cards and electronic fund transfer.
New data from the Central bank of Kenya shows that there has been a rapid intake of alternative methods of payment by consumers since June last year. The use of mobile money transfer or electronic payment services money rose as more individuals were lead to the formal banking system.
The figures showed the value of transfers through mobile money increased by 54 percent to Ksh919.22 billion as at the end of June. Mobile money transfer increased by almost 45 percent to 384.06 million transactions over the same period.
Operators in the plastic and mobile money sectors said Kenyans were warming up to the cash-less alternatives due to their increased safety records and convenience.
The CBK data also showed that the volumes of payments made through electronic fund transfer (EFT) increased by 55.6 percent in 12 months to June this year, revealing increased public awareness and acceptance of the payment system.
Speaking about the data, Managing Director for Mobile Pay Limited which owns Tangaza Money Transfer Services said that handling cash is expensive and insecure so Kenyans are opting for savings made through plastic and mobile money payments which are cheaper compared to what it would cost to use cash.
The transactions made through EFT increased by almost 12 percent, but the average amount per transaction decreased by close to 38 percent.
CBK said that mobile money operators saw their customer base increase over the twelve month period with Safaricom’s Mpesa still being the market leader with a market share of 64.43 percent followed by Zain’s Zap and Yu with 24.42 and 11.15 percent respectively.
Two months ago Financial Sector Deepening Kenya (FSD) said that if the country adopts electronic funds transfer with the aim of reducing cash formal inclusion would rise to 70 percent of the populations and overall exclusion would reduce to 20 percent.
The last survey done by FSD indicated hat overall financial inclusion increased to 67 percent from 58.7 percent while exclusion dropped to 32.7 percent from 41.3 percent between 2006 and 2009.