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According to a TechCabal article published this week, Safaricom’s MPESA market share fell from 97% to 90% over five consecutive quarters up to December 2024. Airtel Money grew in the same time period from 3% to 9%. This is the most sustained erosion in years of M-PESA dominance, and signals the beginning of a fundamental shift in the mobile money industry. Safaricom’s lack of response is what really stands out, not just the numbers.
M-PESA pricing has not changed despite clear signs of competition pressure. There have not been any adjustments to transaction costs or cost structures in order to reflect the growing frustration of users. This raises some questions about Safaricom’s view of the losses: if it considers them temporary or negligible. It also indicates a possible blind spot in the company’s strategy, where the protection of shareholder returns is given priority over responding to signals from the market that would normally trigger an urgent response.
Most Kenyans operate in a low-trust, high-cost environment where every shilling counts. Informal work dominates, incomes fluctuate, and credit is hard to access. These realities shape a society of budget hunters (people who scrutinise charges, compare services, and switch based on value).
Mobile money ( Once seen as a convenience,it has now become a part of daily cost management. Airtel Money’s flat-rates and no-fee options, such as sending money to Airtel Money users, appeal directly to the survival instinct. M-PESA, with its complex pricing structure and tiers, feels out of touch when it comes to how Kenyans make their financial decisions.
As long as this trend continues, price-sensitive users are more likely to see Airtel Money or other players as being more in line with their reality. Next Wave continues following this ad.
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Profit motives above customer needs
Safaricom’s reluctance in acting decisively to address the perception that MPESA is costly points to a deeper strategic corporate approach. Safaricom, as a listed company is designed to prioritize shareholder returns. Mobile money has become its mainstay. Strongest revenue streamoften cushions weaker voice and text performance. M-PESA fees are designed to maximize revenue while avoiding regulatory backlash. If you lower or simplify fees, it could have a negative impact on this key profit driver.
M-PESA transaction fees have changed with time. Transaction fees were introduced in 2007 and have been adjusted periodically since then. Safaricom reduced the charges for transactions between KES10 and KES1,500 by as much as 67% in 2014 to encourage low-value transactions. In 2018, it reduced fees for sending KES 100 to KES 500, from KES 11 down to KES 6. M-PESA and other mobile money services, as well as banks, zero-rated transfers below KES 1,000 during the COVID-19 pandemic. Despite these changes frequent low-value transaction remain expensive, which reinforces perceptions that M-PESA costs a lot.
Safaricom’s response to user feedback is increasingly out of step with the user experience. M-PESA is serving investor needs more than users. Many Kenyans think Safaricom only reacts when it is pushed by regulators or rivals. Safaricom’s tardy compliance with Interoperability Rules reinforced this view as did its slow pace of improving user experiences.
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Airtel Money’s market share jump from 6% to 9% is not a temporary fluctuation, but a real shift. The growth is due to free Airtel-to Airtel transfers, lower fees across networks, and cheaper withdrawals. Airtel Money charges KES 11 to send KES 1,000 to another network, while M-PESA charges KES 13 Airtel Money charges KES 29, which is KES 2 less than MPESA.
Airtel Money is still struggling to break M-PESA’s grip on its agent network. M-PESA agents are the most dominant in the country. The Central Bank’s plan to open agency networks by 2022 has been stalled. It missed deadlines by two year. Safaricom could be resisting the plan because it understands what’s at risk: its agents were created with its resources and opening them up would weaken a major advantage.
Safaricom benefits from the market’s inertia. M-PESA is used for everything, from rent to school fees, hospital bills and government services. Safaricom is comfortable with the high costs of switching, both psychologically and practically. It believes it can delay reforms for as long as its ecosystem keeps users tied to M-PESA.
Although users complain about high MPESA charges, they rarely discuss the costs of maintaining a reliable payment system. Safaricom invests heavily to maintain M-PESA’s network. This includes security upgrades, compliance with regulations and expanding its reach into remote areas.
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Although the company does not disclose the costs of operating M-PESA in its annual reports, it shows significant capital expenditure to maintain service quality. This could explain at least part of why M-PESA’s fees remain high. Users are left to believe that M-PESA fees are set solely for profit, rather than operational necessity, because there is no transparency regarding the unit economics.
The changing consumer sentiment is harder to ignore. Airtel Money, along with other fintechs’ growth, shows Kenyans are exploring alternative options. M-PESA is no longer a challenge of infrastructure dominance. It must now show that it understands the needs of a society which budgets aggressively and searches for value.
Kenn Abaya
TechCabal Senior Reporter
Thanks for reading. Please email kenn[at]bigcabal.com with your thoughts on this edition of NextWave. Click on reply to share your thoughts.
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