PesaLink fees are falling across Kenya as more banks adopt free small transfers and a flat KES 20 charge for larger transactions.
Nineteen banks and microfinance institutions now offer the discounted pricing, nearly twice as many as two months earlier, according to a Business Daily report published July 21. The expansion marks a coordinated attempt by lenders to compete more aggressively with Safaricom’s M-Pesa in Kenya’s high-volume retail payments market.
Under the revised pricing model, customers pay nothing to transfer up to KES 1,000 between participating institutions. Transfers above KES 1,000 and up to KES 999,999 attract a flat fee of KES 20.
Previously, PesaLink charges generally increased according to the value of a transaction and could reach as much as KES 250.
PesaLink fees draw more major banks
Absa Bank Kenya and Stanbic Bank Kenya are among the latest large lenders to adopt the reduced charges. They join KCB Bank Kenya, Diamond Trust Bank and Prime Bank, which introduced the lower pricing in May.
Other participating institutions include Access Bank Kenya, Credit Bank, Ecobank Kenya, SBM Bank, GT Bank, Bank of Baroda, Victoria Commercial Bank and Citibank’s Kenya operation.
Faulu Microfinance Bank and Caritas Microfinance Bank have also joined the initiative, extending the campaign beyond commercial banks.
Five of Kenya’s 10 largest lenders now participate. However, several major institutions have not adopted the discounted structure, including Equity Bank Kenya, Co-operative Bank of Kenya, Standard Chartered Bank Kenya, NCBA Bank Kenya and I&M Bank.
The campaign, branded “Tuma Direct na Mbao,” is being coordinated through PesaLink. The interbank payment switch is owned by Kenyan banks under the Kenya Bankers Association.
The word “mbao” is commonly used in Kenya to refer to KES 20, highlighting the flat-fee proposition at the center of the campaign.
Banks target M-Pesa’s pricing advantage
For years, M-Pesa has dominated Kenya’s everyday money transfers because of its reach, convenience and relatively predictable transaction costs.
Safaricom charges no fee for sending very small amounts. However, charges increase as transaction values rise, creating an opening for banks to compete on price.
According to the pricing comparison in the report, an M-Pesa transfer of between KES 501 and KES 1,000 costs KES 33. By contrast, participating PesaLink institutions now process transfers of up to KES 1,000 at no charge.
At higher values, PesaLink’s flat KES 20 fee becomes more significant. Sending the maximum KES 250,000 allowed in a single M-Pesa transaction costs KES 108, based on the cited tariff comparison. Safaricom publishes transaction charges according to the amount sent and the type of transfer.
The comparison does not mean PesaLink and M-Pesa serve customers in exactly the same way. M-Pesa operates as a mobile wallet and supports a wide range of payments, merchant services, savings products and other financial tools.
PesaLink, meanwhile, primarily moves funds directly between accounts held at participating financial institutions. As a result, customers generally need access to a bank, microfinance institution, savings cooperative or connected financial wallet.
Still, the reduced PesaLink fees could make bank-to-bank transfers more attractive for customers who already maintain accounts.
Why cheaper interbank transfers matter
The pricing shift could affect both consumer behavior and competition across Kenya’s financial sector.
For individuals, the lower charges reduce the cost of sending money to relatives, paying small suppliers or dividing shared expenses. Businesses may also benefit when making frequent payments to vendors or employees with accounts at different banks.
The flat-rate structure also gives customers greater certainty. Under tiered pricing, users must check the applicable charge before confirming a transaction. A single KES 20 fee is easier to understand, particularly when sending larger amounts.
For banks, cheaper transfers offer a way to bring customers back into their own mobile applications and digital channels.
Many Kenyan customers hold bank accounts but still use M-Pesa for routine payments because of its familiarity and widespread adoption. Banks risk losing valuable customer activity when account holders move money out of the banking system before completing everyday transactions.
By lowering PesaLink fees, lenders can encourage customers to keep funds within bank accounts and use bank-owned payment infrastructure more frequently.
Simpler payment identifiers could boost adoption
Price is only one part of PesaLink’s competitive challenge.
Bank transfers often require customers to enter full account numbers and confirm the receiving institution. The process can be slower and more prone to errors than sending money to a mobile phone number.
PesaLink plans to move toward simpler identifiers, according to the report. Customers could eventually send funds using information such as a mobile number or national identification number instead of entering a full bank account number.
That approach could narrow one of the biggest convenience gaps between interbank transfers and mobile money.
However, any expanded use of personal identifiers would require strong verification, privacy and fraud-prevention controls. Financial institutions would need to ensure that payments reach the intended account while protecting sensitive customer information.
PesaLink network expands beyond traditional banks
PesaLink connects more than 195 institutions, including commercial banks, savings and credit cooperatives, microfinance providers and financial technology wallets, according to the report.
The network handles more than 1 million transactions a month, with daily transaction values estimated at between KES 5 billion and KES 6 billion.
PesaLink is also seeking closer connections with telecommunications operators as Kenya moves toward greater interoperability between banks, mobile wallets and other payment platforms.
Interoperability allows customers to transfer money across systems without being locked into a single provider. In practice, that could reduce friction between bank accounts and mobile money while increasing competitive pressure on transaction fees.
Competition will depend on customer behavior
M-Pesa retains major advantages, including a large customer base, an extensive agent network and deep integration into Kenya’s consumer and business economy.
Safaricom has also continued expanding M-Pesa beyond basic transfers into savings, investments and other financial products. In February, the company introduced stock trading through M-Pesa in partnership with Kestrel Capital, extending the platform’s role in Kenya’s financial sector.
Banks therefore face a broader challenge than simply undercutting M-Pesa on transfer fees. They must also make their applications reliable, easy to use and widely accepted by customers and merchants.
The next issue to watch is whether more large banks adopt the discounted PesaLink fees. Wider participation, simpler payment identifiers and stronger links with mobile wallets could determine whether the campaign produces a lasting shift in how Kenyans move money.
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