Is M-Pesa the Robin Hood of Finance? Spoiler Alert: It's More Like the Sheriff of Nottingham (and Everyone Pays Up)

Introduction: The Double-Edged Sword of M-Pesa

Once upon a time in the land of Hustle Nation (a.k.a. Kenya), an innovation emerged that was supposed to be a game-changer, a financial superhero, a digital messiah for the unbanked. M-Pesa, Safaricom’s mobile money platform, was launched in 2007, promising financial inclusion for the masses. And boy, did it deliver! Today, M-Pesa moves billions of shillings daily, making transactions smoother than a Nairobian maneuvering through traffic with matatu driver instincts.

But let’s get real. While M-Pesa has made life easier, it has also become a necessary evil. Like the Sheriff of Nottingham in the Robin Hood tales, it takes from everyone—not just the rich—to keep its treasury overflowing. Transaction fees, hidden charges, monopoly pricing, and digital lending traps have turned it into a financial tax collector in disguise. Everyone pays, and some pay a lot.

So, is M-Pesa the savior of financial inclusion or a highway robber charging tolls at every turn? Let’s break it down.

The High Cost of M-Pesa Transactions: When Sending Money Feels Like Paying Rent

Picture this: You need to send Ksh 500 to your shosho in the village. Simple, right? Well, brace yourself because Safaricom’s tollbooth is open, and they want their cut. By the time shosho receives her money, a chunk of it has already been swallowed by transaction fees. It’s almost as if you’re not sending money—you’re making a sacrifice to the M-Pesa gods.

M-Pesa transaction costs have long been a source of frustration. The charges apply everywhere: sending money, withdrawing cash, paying bills (Lipa na M-Pesa), and even checking your bank balance (because knowledge isn’t free, apparently). As of 2023, Safaricom made a staggering Ksh 50 billion from M-Pesa alone. To put that into perspective, that’s more money than some counties in Kenya get for their annual budget.

But wait, it gets worse. The infamous PayBill and Buy Goods charges are the silent killers. You’d think businesses using Lipa na M-Pesa would get some relief, but no! Both the business and the customer get taxed for daring to transact. This means that whether you’re paying for your mutura at a roadside kiosk or clearing your hospital bill, Safaricom is always eating.

The Disappearing Act: "M-Pesa imekata pesa lakini haijafika!"

If you’ve been in Kenya long enough, you’ve either experienced or heard this phrase: M-Pesa imekata pesa lakini haijafika!

Translation? “M-Pesa has deducted money, but the recipient hasn’t received it.” This phenomenon is as Kenyan as nyama choma and corrupt politicians. Sometimes the money eventually shows up. Sometimes it doesn’t. Either way, your stress levels shoot up, and customer care tells you to “wait for 24 hours.” Meanwhile, your money is chilling in Safaricom’s pockets, earning interest for them.

So, while M-Pesa has revolutionized money transfer, the cost of using it is high—literally and figuratively. The question is, do we have alternatives? Let’s talk about M-Pesa’s dominance and lack of affordable alternatives next.

M-Pesa’s Dominance and Lack of Affordable Alternatives: The Financial Monopolist We Can’t Escape

If Kenya had a national anthem for financial services, it would go something like: M-Pesa, M-Pesa everywhere, but not a cheaper option in sight!

M-Pesa isn’t just big; it’s massive. Safaricom controls 98.9% of the mobile money market in Kenya. Competing mobile money services like Airtel Money and T-Kash exist, but they are about as effective as a power blackout in Nairobi—every once in a while, they show up, but they don’t really change much.

Why Don’t We Have Stronger Competitors?

You’d think with all the complaints about M-Pesa charges, alternative services would be thriving, right? Wrong. Competing against M-Pesa is like trying to race a matatu in Nairobi traffic—you will be outmaneuvered, outpaced, and quite possibly crushed. Here’s why:

1. Interoperability Favors Safaricom While you can now send money between M-Pesa, Airtel Money, and T-Kash, M-Pesa still enjoys home-field advantage. Many businesses only accept Lipa na M-Pesa, and a majority of mobile money agents deal exclusively with M-Pesa.
2. Agent Network Monopoly M-Pesa has a sprawling network of over 237,000 agents across the country. Meanwhile, Airtel Money agents are as rare as Nairobians obeying traffic lights. If a competitor can’t match M-Pesa’s agent network, it struggles to scale.
3. Customer Habit and Trust Kenyans have been conditioned to use M-Pesa for everything—paying rent, buying groceries, sending school fees, and even bribing a cop when caught overlapping (not that we encourage corruption, but we see you). Switching to a lesser-known service feels risky, even if it’s cheaper.
4. Regulatory Hurdles Fintech startups trying to enter the market face a regulatory nightmare. The Central Bank of Kenya (CBK) imposes stringent licensing requirements, making it hard for small players to break through. Meanwhile, M-Pesa, which started as an experiment, was allowed to grow unchecked.

The One-Service-to-Rule-Them-All Problem

Imagine if we only had one supermarket chain, one fuel company, or one nyama choma joint (now that would be a crisis!). That’s the situation with M-Pesa—one dominant player, no real alternative. And with monopoly comes the power to dictate prices, meaning Kenyans will continue paying premium fees with no escape route.

So, we’ve established that M-Pesa is the undisputed king. But what happens when a business is too profitable? That brings us to the next issue: Profitability vs. Social Responsibility.

Profitability vs. Social Responsibility: The Billion-Dollar Dilemma

Let’s be honest—Safaricom is not in the business of charity. If making money was an Olympic sport, M-Pesa would be Usain Bolt. The company rakes in over Ksh 50 billion in profits from M-Pesa alone, which is more than what some entire ministries get in the national budget.

But here’s the problem: M-Pesa was marketed as a financial inclusion tool, meant to uplift the poor. Yet, today, it often feels more like a financial extraction tool, squeezing money from the very people it was supposed to help.

The Ethical Dilemma: Should Financial Inclusion Cost This Much?

Financial inclusion is great—until it comes at the price of high transaction fees, hidden charges, and a digital debt trap. The biggest victims? Low-income earners who rely on M-Pesa for their daily transactions.

• A boda boda rider sending Ksh 200 to his family? That’s a 5% charge.
• A mama mboga using PayBill to restock her stall? More deductions.
• A student receiving pocket money? M-Pesa still takes its share.

This is the paradox: M-Pesa provides access, but at what cost? It’s like being invited to an all-you-can-eat buffet but finding out you have to pay for every plate, spoon, and even the toothpick at the end.

Why Won’t Safaricom Reduce Charges?

The answer is simple—because it doesn’t have to. Monopoly power means it sets the rules. Every time people complain about high transaction fees, Safaricom gives a diplomatic response about "business sustainability" and "investment in innovation." But let’s be real: When you’re making Ksh 50 billion a year, you can afford to cut Kenyans some slack.

Of course, not everyone is suffering equally. While the average Kenyan is paying M-Pesa charges every day, Safaricom shareholders are laughing all the way to the bank.

But what happens when you add digital credit and mobile loans into this equation? That’s where things go from bad to worse. Let’s talk about the digital debt trap next.

Digital Credit and the Debt Trap: Fuliza, M-Shwari, and the Never-Ending Loan Cycle

If M-Pesa is the Sheriff of Nottingham, then Fuliza and M-Shwari are his loyal tax collectors—always ready to extend a hand, but never for free. These digital credit services have made borrowing money as easy as buying smokie pasua by the roadside. But here’s the catch: getting out of debt is harder than getting a government job without connections.

Fuliza: The Loan You Didn’t Ask For, But Can’t Escape

Introduced in 2019, Fuliza is an overdraft facility that lets you complete M-Pesa transactions even when your balance is lower than your dignity after a breakup. It’s basically Safaricom saying: "Hatuna pesa, lakini tunaweza Fuliza!" (We don’t have money, but we can Fuliza!)

Kenyans have embraced it with open arms (or rather, empty wallets). In 2023 alone, Fuliza disbursed over Ksh 700 billion—which is more than what the Kenyan government allocates for education! But with daily interest rates that can reach over 30% per month, Fuliza quickly turns into a never-ending cycle of debt.

M-Shwari: The Friendlier But Still Expensive Cousin

M-Shwari, launched in partnership with the Commercial Bank of Africa (CBA), offers savings and loan services. It looks good on paper—borrow money instantly, no paperwork, no bank visits. But the reality?

• Interest rates can hit 7.5% per month, meaning you’re paying much more than you borrowed.
• If you miss payments, you’re blacklisted on CRB (Credit Reference Bureau), which in Kenya is like being marked for life.
• Many Kenyans take out M-Shwari loans just to pay off Fuliza overdrafts, leading to a digital version of shylocking.

The Over-Indebtedness Crisis

What happens when millions of Kenyans rely on these loans just to survive? Financial stress, increased poverty, and a country where debt is a lifestyle. According to CBK reports, over 14 million Kenyans have taken mobile loans, many of them trapped in a cycle of borrowing and repaying just to stay afloat.

We’re not saying digital credit is all bad. For many, it’s a lifeline when times are tough. But at what cost? Should financial access come with a price tag so high that people can never get out of debt?

The government and Central Bank of Kenya (CBK) have a role to play in regulating these services. But are they actually doing anything? That’s the next big question.

Financial Inclusion or Financial Exploitation? The High Cost of Access

When M-Pesa launched in 2007, it was hailed as the great equalizer—a tool that would empower the unbanked and bring financial services to everyone. And in many ways, it delivered. Today, over 82.9% of Kenyans have access to formal financial services, a massive leap from just 26.7% in 2006.

But here’s the problem: Access doesn’t always mean affordability.

How M-Pesa Has Improved Financial Inclusion

There’s no denying M-Pesa’s impact:

✅ It allows people to send and receive money instantly.

✅ It helps small businesses manage cash flow.

✅ It has created thousands of jobs for M-Pesa agents.

✅ It enables access to credit, savings, and even government services.

But here’s the kicker: financial inclusion should not feel like a financial prison.

The Cost of Convenience: Who Pays the Price?

M-Pesa has improved access, but at a significant cost to the poor. The very people who rely on it the most—casual laborers, small business owners, farmers, and urban hustlers—end up paying the highest percentage of their income in transaction fees and loan interests.

Think about it:

• A daily wage earner making Ksh 500 per day might need to send Ksh 200 home—but after transaction fees, their family receives less than that.
• A small business using PayBill or Buy Goods services gets double taxed—once when receiving money, and again when withdrawing it.
• A struggling Kenyan borrowing Ksh 1,000 on Fuliza could end up paying Ksh 1,300 or more due to interest rates.

Financial Inclusion Shouldn’t Mean Financial Drain

The big question is: Should basic financial services cost this much? Safaricom’s defenders will argue that M-Pesa has transformed Kenya’s economy (which is true). But does that justify the exorbitant fees, hidden charges, and debt traps?

This brings us to the government and CBK—are they stepping in to protect Kenyans, or are they just watching from the sidelines?

What the Government and CBK Are Doing (or Not Doing) About M-Pesa’s Pricing and Practices

If you were hoping that the government and the Central Bank of Kenya (CBK) would step in like financial superheroes to save Kenyans from M-Pesa’s tax-like charges, you might be disappointed. While some efforts have been made, they often feel as ineffective as a broken traffic light in Nairobi—everyone sees the problem, but no one really stops.

The Regulatory Efforts So Far

1. CBK’s “Moral Persuasion” Approach - Instead of enforcing price caps on M-Pesa, CBK has preferred to “engage” Safaricom in discussions. This is the equivalent of telling a lion to “please consider eating fewer gazelles." The result? Occasional temporary fee reductions, like the waiving of charges for transactions below Ksh 1,000 during the COVID-19 period. But as soon as the crisis ended, fees shot back up like matatu fares after rain starts pouring.
2. Interoperability Initiatives - CBK has pushed for mobile money interoperability, meaning that you can now send money between M-Pesa, Airtel Money, and T-Kash. Sounds good, right? Not really. M-Pesa is still dominant, and many businesses refuse to accept payments from Airtel Money or T-Kash because everyone uses M-Pesa.
3. Regulating Digital Lenders - After years of complaints about exploitative Fuliza and M-Shwari loans, CBK finally stepped in to regulate digital lenders in 2022. Now, lenders must be licensed and cannot harass defaulters (so no more threatening messages to your grandmother because you borrowed Ksh 500). But here’s the catch—Fuliza and M-Shwari are still operating freely, with interest rates that can trap Kenyans in never-ending cycles of debt.

What’s Still Missing?

✅ Capping Transaction Fees – Countries like India have imposed limits on mobile money fees. Why can’t Kenya do the same?

✅ Stronger Competition Laws – Safaricom enjoys near-monopoly power. The Competition Authority should encourage alternatives by reducing regulatory barriers for fintech startups.

✅ Consumer Protection Against Hidden Charges – Have you ever tried calculating the total cost of an M-Pesa transaction before sending money? (Spoiler alert: It’s more confusing than a Nairobi landlord’s lease agreement.)

✅ Public Pressure for Lower Fees – Kenyans need to demand fair pricing, just like we do with fuel prices. If Safaricom can afford to sponsor English football clubs, it can afford to cut transaction fees.

So, Is the Government Actually Doing Enough?

Short answer: No. Long answer: They are trying—but not hard enough. Safaricom’s influence in Kenya’s economy is so strong that even policymakers hesitate to take aggressive action.

But Kenyans are not staying silent. There have been growing calls for lower transaction fees and fair competition in the fintech sector. Let’s explore that next.

Calls for Lower Transaction Fees and Fair Competition in the Fintech Sector

Kenyans are not known for suffering in silence (unless it’s about Arsenal’s title chances, in which case we pretend we’re fine). Over the years, there have been growing public demands for Safaricom to reduce M-Pesa transaction fees and for the government to create a fair playing field in the fintech space.

Public Outcry and Campaigns

1. Social Media Revolts
2. Political Leaders Weigh In
3. Consumer Protection Groups

The Struggles of Alternative Fintech Solutions

M-Pesa’s dominance makes it hard for new fintech players to compete.

• Barriers to Entry – Any fintech company that wants to challenge M-Pesa needs millions in capital, a vast agent network, and regulatory approvals.
• Safaricom’s Market Power – Even when startups launch digital payment alternatives, they struggle to integrate with major retailers or attract enough users.
• Lack of Public Trust – Kenyans are so used to M-Pesa that switching to another service feels like learning a new dance move—it sounds good in theory, but most people won’t try.

So, while fair competition could bring down transaction fees, Safaricom’s monopoly power keeps prices high and options limited.

Cases of Lost Money, System Failures, and Fraud

It’s bad enough that M-Pesa is expensive, but what happens when you lose money due to system errors or fraud?

• Sometimes, money “disappears” in transit (M-Pesa imekula pesa!).
• Fraudsters have perfected SIM swap scams, fake PayBill numbers, and SMS cons, targeting unsuspecting users.
• Safaricom’s customer care often takes forever to resolve disputes—unless you’re lucky enough to know someone inside.

The Risks of Relying on a Single Platform

Kenya’s economy is now heavily dependent on M-Pesa. If M-Pesa were to go down for even one day, millions of businesses and individuals would be stranded.

• We saw glimpses of this when M-Pesa services failed in 2019 and 2021—the panic was almost as bad as when Safaricom announces Bonga Points expiry dates.
• Over-reliance on one financial platform is dangerous. It gives M-Pesa too much control over how Kenyans transact, how businesses operate, and even how banks interact with customers.

Final Verdict: Is M-Pesa a Robin Hood or the Sheriff of Nottingham?

• Robin Hood stole from the rich to give to the poor.
• The Sheriff of Nottingham taxed the poor to enrich the powerful.
• M-Pesa? It started as Robin Hood but now operates like the Sheriff of Nottingham—helping Kenyans access money, but charging them a premium for it.

The Way Forward

1. Lower transaction fees – M-Pesa should not cost this much to use. A price cap, like India’s, could help.
2. Stronger fintech competition – Alternative solutions need support to challenge M-Pesa’s monopoly.
3. Better consumer protection – Lost money, fraud, and system failures should be addressed faster.
4. Financial inclusion should be affordable – Access to money should not be a burden on low-income users.

Final Thoughts

M-Pesa is a brilliant Kenyan innovation, but it needs better regulation, fairer pricing, and real competition. Otherwise, Kenyans will continue paying “digital taxes” in the name of convenience.

Now, the big question is: Will anything change? Or will Kenyans keep tweeting their frustrations while Safaricom counts its billions?

Only time will tell.

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