First published 23 March, 2025
Image: NMG
A news item piece by this week showed that Safaricom’s M-PESA market share dropped sharply from 97% to 91% over five consecutive quarters leading to December 2024, while Airtel Money grew from just 3% to 9% in the same period. This is the most sustained erosion of M-PESA’s dominance in years, signalling the beginning of a fundamental change in the mobile money market. Yet, what stands out is not just the numbers but Safaricom’s muted response.
Despite clear signs of competitive pressure, M-PESA’s pricing has stayed the same. There have been no adjustments to transaction fees or cost structures to reflect growing user frustration. This raises questions about Safaricom’s view of these losses: whether it sees them as temporary or negligible. It also points to a possible strategic blind spot, where protecting shareholder returns takes priority over responding to market signals that would, in any other business, trigger urgent action.
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) has become part of this daily cost management. Airtel Money’s flat rates and zero-fee options (for some services such as sending money to other Airtel Money users) appeal directly to this survival instinct. In contrast, M-PESA’s complex, tiered pricing feels out of touch with how most Kenyans make financial decisions.
The longer this continues, the more likely it is that price-sensitive users will see Airtel Money and other players as better aligned with their realities. Next Wave continues after this ad.
Profit motives over customer needs
Safaricom’s reluctance to act decisively on the perception that M-PESA is expensive points to a deeper corporate strategy. As a listed company, Safaricom is built to prioritise shareholder returns. Mobile money is now its strongest revenue stream, often cushioning weaker voice and SMS performance. M-PESA’s fees are designed to maximise revenue while avoiding regulatory pushback. Lowering charges or simplifying fees risks cannibalising this core profit driver.
M-PESA’s transaction fees have changed over time. When it officially launched in 2007, transaction fees were introduced and have been periodically adjusted. In 2014, Safaricom reduced charges for transactions between KES 10 and KES 1,500 by up to 67% to encourage low-value transactions. In 2018, it lowered fees for sending KES 101 to KES 500 from KES 11 to KES 6. During the COVID-19 pandemic, M-PESA, along with other mobile money services and banks, zero-rated all transfers under KES 1,000. Despite these changes, frequent low-value transactions remain costly, which reinforces the perception that M-PESA is expensive.
The growing gap between user experience and Safaricom’s response exposes a hard truth: M-PESA increasingly serves investor needs over those of users. Many Kenyans believe Safaricom only responds when pushed, either by regulators or competitors. Safaricom’s delayed compliance with interoperability rules reinforced this view, as did its slow pace in improving user experiences.
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There is also an unspoken class divide in how M-PESA operates. Premium services like M-PESA Global and Globalpay and investment tools target middle-class users. Meanwhile, core services, including transfers, withdrawals, Fuliza, remain costly and inflexible. This builds a perception that Safaricom designs products for the wealthy while treating mass-market users as cash cows. Airtel Money has moved quickly to exploit this gap and has positioned itself as the affordable choice for ordinary Kenyans.
Airtel Money’s market share jump to 9% signals a real shift, not a short-term fluctuation. The growth comes from free Airtel-to-Airtel transfers, lower cross-network fees, and cheaper withdrawals. Sending KES 1,000 to other networks costs KES 11 on Airtel Money, while M-PESA charges KES 13. Withdrawing the same amount costs KES 29 on Airtel, KES 2 less than M-PESA.
Still, Airtel Money struggles to break M-PESA’s grip on the agent network. M-PESA agents dominate the country. A 2022 Central Bank plan to open up agency networks stalled, missing deadlines by two years. Safaricom may be resisting because it knows what’s at stake: its agents were built with its resources, and opening them up could weaken a key advantage.
Safaricom also benefits from deep market inertia. Users remain on M-PESA because it is embedded in everything, including rent, school fees, hospital bills, and government services. The psychological and practical costs of switching are high, and Safaricom appears comfortable with this, calculating that it can delay reforms as long as the ecosystem keeps users tethered.
While users often complain about high M-PESA charges, the cost of running a reliable payment infrastructure is rarely discussed. Safaricom invests heavily in maintaining M-PESA’s network, including security upgrades, compliance with financial regulations, and expanding its reach to remote areas.
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The company does not publicly break down the cost of operating M-PESA, but its annual reports show significant capital expenditure on maintaining service quality. This could explain, at least in part, why M-PESA fees remain high. However, without more transparency on the unit economics of M-PESA’s pricing, users are left to assume that the fees are set purely for profit rather than operational necessity.
And shifting consumer sentiment is becoming harder to ignore. Airtel Money’s growth, alongside other fintechs, shows that Kenyans are exploring alternatives. M-PESA’s challenge is no longer about infrastructure dominance. It must now prove it understands a society that budgets aggressively, hunts for value, and increasingly questions corporate motives.
Kenn Abuya
Senior Reporter,
Thank you for reading this far. Feel free to email kenn[at]bigcabal.com, with your thoughts about this edition of NextWave. Or just click reply to share your thoughts and feedback.
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