NAIROBI, Kenya – Kenya’s digital payments landscape is becoming increasingly competitive following a major reduction in PesaLink transaction fees by 19 banks.
The pricing overhaul marks one of the banking sector’s most significant attempts to challenge Safaricom’s M-Pesa, which has long dominated mobile money services in the country.
The latest changes have sparked renewed debate among consumers over which platform offers better value in 2026.
While both services provide fast money transfers, the cheaper option ultimately depends on the amount being sent, the recipient, and whether the transaction is made through a bank account or a mobile wallet.
Under the new “Tuma Direct na Mbao” campaign, participating banks have introduced a simplified fee structure for PesaLink transactions.
Customers can now send up to Sh1,000 free of charge, while transfers ranging from Sh1,001 to Sh999,999 attract a flat fee of Sh20.
This replaces the previous tiered pricing system, where charges could reach as high as Sh250 depending on the value of the transfer.
The revised rates are currently available across 19 banks and microfinance institutions, almost twice the number that had adopted the pricing model only a few months earlier.
M-Pesa, on the other hand, continues to operate under its existing tiered pricing system.
Transfers of up to Sh100 remain free, while customers sending between Sh101 and Sh500 pay Sh7. Sending Sh501 to Sh1,000 costs Sh33, with charges increasing gradually as transaction values rise. At the maximum single-transfer limit of Sh250,000, customers pay Sh108.
A comparison of the two platforms shows varying advantages depending on the transaction size. For transfers below Sh100, both services allow customers to send money without paying any fees.
Between Sh101 and Sh500, M-Pesa charges Sh7, while customers using participating banks can transfer the same amounts through PesaLink free of charge, provided the transaction falls within the Sh1,000 free threshold.
The difference becomes more noticeable for transfers between Sh501 and Sh1,000. While M-Pesa users pay Sh33 to send Sh1,000, customers using PesaLink through participating banks incur no charges.
For transfers above Sh1,000, PesaLink becomes even more competitive, maintaining a flat Sh20 fee regardless of whether a customer is sending Sh2,000 or several hundred thousand shillings.
In contrast, M-Pesa’s charges continue to increase with the transaction amount, making bank-to-bank transfers considerably more affordable for medium and high-value payments.
The aggressive fee reductions reflect banks’ efforts to capture a larger share of Kenya’s digital payments market.
For years, M-Pesa has maintained a dominant position thanks to its convenience, extensive agent network, and widespread customer adoption.
Through PesaLink, which is operated by Integrated Payment Services Limited (IPSL) under the Kenya Bankers Association, banks enable customers to transfer money instantly between bank accounts without routing funds through a mobile wallet.
Lower transaction costs are expected to encourage customers to keep more of their financial activity within the banking system.
Despite the pricing advantage enjoyed by PesaLink, M-Pesa continues to offer several strengths that remain attractive to millions of users.
Its acceptance by merchants across the country, large customer base, extensive agent network, and integration with services such as Lipa na M-Pesa, Fuliza, M-Shwari, and government payment platforms continue to reinforce its position.
Notably users can access M-Pesa without the need for a bank account, making it accessible to a wider segment of the population. For many Kenyans, convenience and accessibility still outweigh lower transaction costs.
The revised PesaLink pricing is particularly appealing to businesses paying suppliers, employers processing salaries, customers transferring funds between multiple bank accounts, professionals receiving payments directly into bank accounts, and individuals making large-value transfers. Paying only Sh20 to move substantial sums represents a significant saving compared to traditional mobile money charges.
Although the latest price cuts are unlikely to weaken M-Pesa’s market leadership overnight, they represent one of the strongest coordinated efforts by Kenya’s banking sector to compete for retail payment volumes.
If more financial institutions adopt the revised pricing and customers increasingly embrace banking apps for everyday transactions, the gap between bank-based transfers and mobile money could continue to narrow.
As competition intensifies, consumers now have stronger incentives to compare transaction costs before deciding how to send money. Kenya’s digital payments industry is gradually shifting from a market driven primarily by convenience to one where pricing is becoming an equally important factor.