Uganda: Telecom Firms Urged to Reduce Mobile Money Fees


Mobile Money channels have become a convenient way of sending and receiving money in Uganda. However, the cost of transactions remains prohibitive to millions of Ugandans, according to one mobile banker.

Matthew Krueger, the Project Manager M-Banking Research at Equity Bank Limited says mobile companies should significantly reduce the fees charged on mobile money transactions in East Africa. "Transaction costs need to come down. We believe that transaction costs need to be around 2 percent," Krueger said on Monday. He was speaking at a conference organised to discuss how to make mobile money more attractive to more phone users.

Uganda has three mobile money service providers including; MTN Uganda, Airtel and Uganda Telecommunication Limited (Utl). The combined total of registered mobile money users is about 2 million. MTN controls 80 per cent of the market share with 1.6 million registered users.

The company transfers up to $90 million (Shs216 billion) per month across its network according to Anthony Katamba, the MTN Uganda Company Secretary. But to do that, MTN bills mobile users between Shs1, 500 and Shs19,000 to complete transactions of Shs5,000 and Shs1 million when using its Mobile Money service.

The charges reflect a proportion of between 1.9 and 30 percent per transaction. Airtel formerly Zain charges; between Shs500 and Shs5, 000 for transactions between Shs5, 000 and Shs1 million. This represents a commission charge ranging from 5 per cent to 10 percent for a deal to be sealed via Airtel Money. Utl through its M-Sente service levies between Shs1, 000 and Shs18, 000 (1.8 -20 per cent) on similar transactions, at agent level.

People transacting less money pay the highest bills while those dealing with over Shs300,000 pay the lowest fees, when percentage proportions are considered.

Krueger is pushing mobile operators to lower the fees to a range similar to what international plastic money companies like; VISA, impose on their customers. He believes that by lowering the cost of transactions, more people in Uganda and the rest of East Africa will be motivated to embrace electronic solutions of banking, saving and transferring money.

Katamba, said the 2 per cent fee for all transactions is not viable at this point. "As volumes grow then yes, it would increase our profitability," he said when asked if the company would consider the suggested commission.