Why Does Moving Money in Kenya Cost So Much?

The fee landscape

Send money through M-Pesa — there's a fee. Transfer funds on Equity's app — there's a charge. Move money from your KCB account to your wallet — another deduction. Pay via Airtel Money, use a Pesapal checkout, withdraw at an agent — fees on top of fees, from multiple companies, multiple times a day.

These charges are so routine that most people accept them as a fixed cost of daily life. But they are not fixed. Every single one is a commercial pricing decision made by a private company. Not a government levy. Not a regulated tariff. A price set by a business, applied to millions of customers, with no obligation to justify the amount publicly.

The Finance Bill 2026, published on May 5, proposes adding 16% VAT on top of digital payment platform fees. That has — rightly — generated public debate. But the debate has focused almost entirely on the government's role. The companies that set the base fees, across the telecoms and banking sectors, have remained largely outside the conversation.

What the industry earned

Kenya's digital payments ecosystem is dominated by a handful of large players — in telecoms, banking, and fintech. Their most recent financial results paint a picture of an industry performing at record levels.

Mobile money

Safaricom's M-Pesa platform processed KES 38.3 trillion in transaction value during FY2025, with 35.82 million active users generating 37.2 billion individual transactions. M-Pesa revenue reached KES 161.1 billion, accounting for 44.2% of Safaricom Kenya's service revenue. The Safaricom Group as a whole posted net income of KES 95.5 billion.

Airtel Kenya, KCB's mobile banking platform, Equity's app-based transfers, and T-Kash collectively serve millions more users. Each applies its own fee structure, independently set.

Banking

Kenya's largest banks also generate substantial revenue from transaction charges, transfer fees, ledger fees, and account maintenance charges. These fee lines contributed to a record year of profitability across the sector.

Across the seven largest banks alone, combined profit after tax for 2025 was approximately KES 246 billion. Combined shareholder dividends reached KES 111.3 billion — a 30.3% increase over the prior year. When Safaricom's net income is included alongside the banking sector, the institutions that collectively set Kenya's transaction fee landscape earned well over KES 340 billion in profit in a single year.

These figures do not imply that profit is inherently problematic. Companies are entitled to earn returns for their shareholders. But the scale of these earnings is relevant context when discussing whether the same companies have the capacity to adjust pricing — and whether the fees they charge are proportionate to the cost of delivering the service.

Even the Central Bank says fees are too high

In September 2025, the Central Bank of Kenya published its Kenya National Financial Inclusion Strategy 2025-2028. In it, the regulator made a notable acknowledgement: mobile money transaction fees in Kenya are too high, and they are limiting the growth of digital financial services.

The CBK's target is to reduce the average mobile money transaction fee from KES 23 to KES 10 by 2028 — a reduction of more than half. The regulator noted that high costs have contributed to stagnation in mobile money usage, with most users relying only on basic person-to-person transfers rather than adopting advanced services like digital credit, savings, or insurance.

When the financial sector regulator itself identifies transaction fees as a barrier to inclusion, the question of why those fees remain at their current levels takes on additional significance — particularly as the companies charging them report record earnings.

Who sets the fees?

Every mobile money platform sets its own fees. Every bank sets its own charges. There is no government regulation that mandates specific fee levels for sending money, withdrawing cash, or transferring between accounts. The Central Bank of Kenya oversees prudential regulation and monetary policy, but the actual price a customer pays per transaction is a commercial decision made by each institution independently.

Fee structures across the industry have remained largely stable for several years, even as customer bases have grown substantially, transaction volumes have increased, and the underlying technology costs have decreased. The economies of scale that come with serving tens of millions of users have not been reflected in lower fees for those users.

Other countries with comparable digital payment adoption have moved in a different direction. India's UPI system, processing over 10 billion transactions per month, is free for consumers and merchants. Brazil's Pix, which became the country's dominant payment method in 2025, is free for individuals. Kenya's own CBK has explored building a Fast Payment System modelled on these approaches, which could introduce competitive pressure on existing fee structures.

What the Finance Bill 2026 proposes

Clause 31 of the Finance Bill 2026 amends the First Schedule to the VAT Act. It removes the VAT exemption for digital payment platform services — specifically "money transfers, payment processing, settlement, merchants acquiring, gateway or aggregation services supplied over a software or platform for a fee or commission by a payment service provider."

The result is a 16% VAT on fees charged by all digital payment platforms — including M-Pesa, Airtel Money, Pesapal, Flutterwave, and others. The tax applies to the fee, not the amount transferred. Over-the-counter cash handling services remain exempt.

For a detailed breakdown of this and all 57 clauses, see our full interactive Finance Bill 2026 explainer.

Who absorbs the tax?

The default assumption in public discussion has been that the 16% VAT will be passed directly to consumers — making every transaction more expensive. This assumption treats corporate pricing as fixed and non-negotiable. It is neither.

There are three possible outcomes for each company in the ecosystem:

Pass it on fully. The consumer pays 16% more on the fee component. This is the scenario most public commentary assumes.

Absorb it fully. The company reduces the base fee so the total cost (fee + VAT) remains the same for the customer. The margin on each transaction decreases, but transaction volumes are preserved.

Split the difference. The company absorbs part of the VAT and passes part on — for example, absorbing it on smaller transactions where customers are most price-sensitive.

Based on published financial results, the industry — across telecoms and banking — has the financial capacity to absorb a VAT of this scale. Whether individual companies choose to do so, and to what degree, will be a commercial decision made by each company's management and board.

Two conversations, not one

The first conversation — whether the government should impose VAT on digital payment fees — is active, necessary, and time-sensitive. Public participation on the Finance Bill 2026 closes on May 25, 2026.

The second conversation — whether the fees being taxed are themselves proportionate — has barely started. Kenyans pay to access and move their own money through an ecosystem of platforms and banks that are collectively posting some of the highest profit margins on the continent. The Central Bank has acknowledged that these fees are higher than they should be. Yet the pricing has never faced the same level of public scrutiny as a government tax proposal.

Both conversations are necessary. Engaging with only one produces an incomplete understanding of why moving money in Kenya costs what it does. The cost to the consumer is a product of two forces — government taxation and corporate pricing. Both warrant examination.