Mobile money services like M-Pesa have revolutionized the way we handle transactions in Kenya.
However, frequent users know that fees can quickly add up. To maximize your savings, it’s crucial to understand the fee structures and adopt cost-saving strategies.
Here’s how you can save money when transacting via M-Pesa and other mobile money networks.
How to save money when using Mpesa
Table of contents
1) Understand fees and charges
Familiarize yourself with M-Pesa’s fees: Knowing the transaction fees for sending money, withdrawing cash, and paying bills can help you avoid unexpected charges.
For instance, transferring Ksh 1,500 costs Ksh 23, but breaking it into two transactions (Ksh 1,000 and Ksh 500) reduces the fee to Ksh 20.
Similarly, withdrawing Ksh 5,000 in two transactions of Ksh 2,500 each costs Ksh 58, while a single transaction costs Ksh 69.
These small changes can lead to significant savings over time.
M-Pesa withdrawal fees table (savings paths)
![How to Save Money When Using Mpesa and Other Mobile Money Networks in Kenya 1 MPesa Withdrawal Savings Calculator](https://money.ke/wp-content/plugins/speedycache-pro/assets/images/image-palceholder.png)
Moneyspace has done the research and found out that, as per the current M-Pesa withdrawal rates, you can save money when withdrawing some specific amounts, two or times instead of a lump sum.
As such, we have created a really simple withdrawal savings calculator for you to use.
Here is a table highlighting some amounts with cheaper transaction options from the figures above:
Amount (Ksh) | Normal Fee (Ksh) | Cheaper option | Cheaper Fee (Ksh) | You save (KES) |
---|---|---|---|---|
2,600 | 52 | 2,500 + 100 | 11 + 29 = 40 | 12/= |
5,100 | 87 | 2,500 + 2,500 + 100 | 29 + 29 + 11 = 69 | 18/= |
11000 | 115 | 3,500 + 7,500 | 52 + 87 = 139 | 28/= |
7,600 | 115 | 7,500 + 100 | 87 + 11 = 98 | 17/= |
3,700 | 69 | 1,500 +2,200 | 29 + 29 = 58 | 11/= |
2) Always check the transaction limits for sending charges
Plan your transactions: To minimize fees, always check the transaction limits for sending charges. Understanding the M-Pesa charges table can help you strategize your transactions.
For instance, if you’re sending Ksh 2,600, it’s cheaper to break it into two transactions (Ksh 2,500 and Ksh 100) instead of one. This way you save some KES 20
3) Use Airtel Money
Leverage Airtel Money’s cost savings: For some transaction ranges, it’s cheaper to send money from Airtel Money to M-Pesa than from M-Pesa to M-Pesa, saving about Ksh 3-7.
Also, Airtel to Airtel sending charges are free. This makes Airtel Money a cost-effective alternative for specific transactions.
4) Use I&M Bank
Optimize your transactions with I&M Bank: Sending money from M-Pesa to your I&M Bank account costs Ksh 20.
Once the money is in your I&M Bank account, you can transfer it to any M-Pesa account for free. This method can significantly reduce your transaction costs, especially for larger sums.
5) Manage your M-Pesa balance
Minimize idle funds: Manage your M-Pesa balance to reduce the time money sits idle in your account.
The average M-Pesa balance is held for about one week before being withdrawn or transferred.
Only keep the minimum amount you need for the week, and send the rest to a money market fund where it can accrue daily interest while still being accessible at short notice.
6) Minimize withdrawal frequency
Opt for larger, less frequent withdrawals: Frequent small withdrawals incur more fees. Withdraw larger amounts at once to reduce the total number of transactions.
For example, withdrawing Ksh 3,600 costs Ksh 69 total while withdrawing the full Ksh 5,000 for that given transaction range, will also cost Ksh 69.
Pay directly with M-Pesa: Instead of withdrawing cash to pay for goods and services, use M-Pesa to pay directly. This can help you avoid withdrawal fees altogether.
Do this only for transactions that don’t attract fees such as Buy Goods (Till), or for amounts that are KES 100, and below.
7) Use M-Pesa to budget and control spending
- Set up a budget: Use the M-Pesa app to allocate funds for different expenses and track your spending. This helps you stay within your budget and avoid overspending.
- Pay bills and buy goods in bulk: Minimize the number of transactions by paying bills and purchasing goods in bulk. This reduces the total transaction fees you incur.
By implementing these strategies, you can significantly reduce the costs associated with mobile money transactions in Kenya. Always stay informed and adapt your habits to make the most of the services available to you.