Money Transfer Within Kenya Part 3
A comment from @alykhansatchu on Money transfer lead to an update of the first post about money transfer from about 3 ½ years ago before the advent of mobile money transfers.
At that time, the cost of sending 10,000 shillings (then about $136) within Kenya was Kshs. 1,700 ($23) with Western Union and 1,850 ($25) with Moneygram - working out to a remittance cost of about 17% - 19% for an instant money transfer. This was mostly done at a few commercial bank branches, some foreign exchange bureaus, and at post offices around the country within banking hours.
90% savings: A lot has happened in the last few years mainly in the form of the arrival of money transfers via mobile phones by MPesa from Safaricom and more recently Zap from Zain.
A recent post last week noted that Western Union in Kenya have just lowered transfer costs to flat rates of 2% i.e. almost 88% cheaper than what they were at the time.
In the last few years, millions of Kenyans have moved on to mobile phones for money transfer and I can’t recall anyone who uses banks for these transactions. Mobile phone have maximums of about $430 (35,000 shillings) for money transfers, but this is more than enough to cater for most remittances, including the emergencies that necessitate instant transfers.
And mobiles are still cheaper; the 2% western union charge to transfer 10,000 shillings works out to about 200 shillings. A transfer of the same amount by Zap costs 75 shillings (0.75%) and 105 shillings (1.05%) by M-Pesa (after combining sender and receiver fees)
International remittance to get cheaper?: Zain hope to link Zap to allow transfers to customers of Zain in different African countries. And Safaricom are setting up a link for transfers from the United Kingdom to Kenya. When these are established, we should also see the cost of internal remittances, whose sometime high cost is a cause for complaint for many Africans in the Diaspora, also drop significantly.