Money Transfer within Kenya

I had a situation over the weekend, where I was faced with a choice of having someone send money instantly to me while I was in Eldoret – and this led to a discussion of the cash remittance business in Kenya

Past:  Surprisingly, Western Union and Moneygram, which have been recording growing volumes and signing up new banks (like KCB) every month, already represent the past in money remittance. The reason for this is the cost of the transfer, which now puts off savvy consumers. E.g. to send 10,000 shillings to Eldoret, the cost was 1,700 (14.5%) via Western Union and 1,850 (15.6%) via Moneygram.

  • Transaction time: a few seconds
  • Cost: about 15% of amount transferred
  • Convenience: All major towns, available at over 10 bank and dozens of forex bureaus which have extended hours.

Present: With recent investments and advances in IT, banks like Barclays and Standard Chartered are now fully networked, with transactions made instantly reflected in accounts. For cash remittance, I’ll give a friend my Barclays account number, and he’d go to his local Barclays branch, e.g. in Mombasa, or Kisumu, and deposit the money into my account – and I’d be able to withdraw it almost instantly in Eldoret.

  • Transaction time: a few minutes
  • Cost: 0 – 500 shillings (depends on withdrawal fees at the bank for over the counter transactions since cash it not always reflected at the ATM)
  • Convenience: One must have an account with a bank which is networked e.g. Barclays, Standard Chartered, NBK, ABC and the bank should have a branch. But banks have very short working hours usually 9 a.m. – 3 p.m. KCB which has the country’s largest branch system has not networked all its branches yet.

Future:  The future will be for money transfer via cellphone, as is already taking place in the Philippines and South Africa. Like MTN, Safaricom and Celtel will one day launch cellphone banking systems to capitalize on the millions of cell phone users, who don’t operate bank accounts, especially in rural areas, where banks have been closing unprofitable branches.

  • Transaction: a few seconds
  • Cost: transaction fee to be determined
  • Convenience: Safaricom and Celtel combined have over 5 million subscribers. Also one can expect market leaders like Western Union and Barclays to capitalise on cell phone banking.

28 thoughts on “Money Transfer within Kenya

  1. Maina

    In your “present time” cash transfer scenario, is it possible for a friend to go to any bank and deposit funds in your bank account as long as they have the account name and number?
    Enjoy your blog!

  2. Anonymous

    mmmm, ok safaricom & celltel have 5million customers. They both have credit transfers schemes(sambaza ….etc). how about zapping cash across this way. Is airtime redeemable for cash?

  3. yoda

    This is actually not a difficult problem to solve and your depiction of the future hits the nail right on the head.

    In fact, my startup, NEO is in the process of developing a system that works as follows:

    1)We act as a trusted intermediary (possiblynecessarily in partnership with an established financial institituion)

    2)Leverage the existing “Sambaza” type of functionality, we allow you to transfer money to whoever you want across networks or to actual bank accounts.

    3)We also intend to allow international transfers to the US by leveraging our partnerships with our American partners.

    Given the logistical dynamics associated, this could take some time but there is absolutely no reason why it shouldn’t be available by the end of the year.

    The cost of deployment is almost negligible we intend to leverage existing infrastructure.

    The costs to the financial institution and mobile operators are also negligible. They afford us secure access to their networks with the relevant layers of authentication and we develop the service at no cost to any one else. We then revenue share based on transaction value and volume.

    This is really as simple as it is. No cost or risk to any of the 3rd parties, secure transfers over a lightweight network and an extremely equitable profit sharing arrangement.

    As I said, this should be available by the end of the year!

  4. yoda

    I forgot to add (in response to the anonymous post before mine) that we will guarantee reedemability of the cash for credit.

    And just to reiterate again:) This should be available by the end of the year! The current challenge we face is in getting institutions interested in actually backing this with their name. (a kind of industrial inertia one might say).

  5. Anonymous

    A twist on this is the rise of cellphone based banking in South Africa. Check out the innovative WIZZIT start-up, who’s enabling remittances as well as day-to-day retail transactions and ATM withdrawals.

  6. Jim Online

    I still think that Werstern Union as the most effective money transfer company. I have already used it and the money arrived complete and on time. I have never tried the other companies because WU has been delivering what I wanted.

  7. bankelele

    jim online: western union is still the best INSTANT money transfer method TO Kenya, but the cost is very high. It’s not appropriate e.g. for parents sending fees or pocket money to students out of Kenya. Bank’s may take a few days to do international transfers, but the cost are much more reasonable than WU

  8. Anonymous

    Another money transfer organisation coming up soon in Kenya is a new entry from the American Company afripayments llc – which is apparently going to use all the post offices in kenya (about 500 of them) to provide face to face local and international funds transfer. This clearly beats the KCB and barclays western union network and does not need bank accounts. The infrastructure aparently uses the VSAT network that posta kenya has recently installed (can be seen as satellite dishes on top of all post offices). Rumour is that the rates will be ridiculously low, and provide a “mwananchi” service where anyone can send money as low as maybe 100 or 1000 shillings, beating the western unions again on minimum amounts to be sent. So no need for accounts, just go to your nearest post office and pick up your money… and it might also be true that western union has lowered their rates because of this rumour, lets wait and see if it will be true

  9. RezzaC

    Does anyone have updates on how the remittance services are in Tanzania?

    I’m from the Philippines, and you’re right, ‘mobile banking’ is the wave of the future here due to the large size of overseas workers remittances. But as to the reliability and accuracy of data or money transfer via cellphone, I don’t have hard facts to prove its as good as Western Union.

  10. propaganda

    About transfer services based on airtime credit (or other phone sim-based debit/credit-card type services): In Europe, regulators require that the provider have a banking licence and a phone service provider licence. I suspect the absence of regulation in Kenya may see the growth of small players, but nobody big will make a serious play until it’s clear which way regulators will go.

  11. Abhinav

    I think thought of sending money through the mobiles is a great concept.. Hi, though I have some views on it and would like others to comment:
    1) In order to step into remittances business there are loads of regulations and licenses to be seeked. How easy is to get these licenses? Food for thought – I am India
    2) How does one comply to the KYC – Know your customer, norms while getting into International Remittances through mobile phones?
    3) Should the service be connected to a Bank to make a way to get cash out, or whether any other way is possible?
    4) Is conversion of airtime to any merchandise purchased allowed in your country?

    Looking forward to certain hiccups i have during my thought flow in this particular area.


  12. Osman

    i believe the scenario of mobile money transfer depending on the mobile operator is very inconvenient, it’s better to be independent on them, this service is provided by one company named contpronto, but it don’t provide it in Africa, i wonder if such a service is supported by any body else.

  13. Chris

    Funny, but western union is 10-20 bucks more expensive than sending through moneygram from here in canada in each category, and you can send 20 bucks through moneygram as well, as opposed to a minimum 50? of western union. Moneygram operates in all post offices here, kinda like the new american thing you’ve mentioned that’s coming to kenya.In fact, moneygram here is way cheaper to use than the banks by about the same margins as western union. Now could someone tell me if i am missing out on a cheaper way to send money to kenya from canada other than moneygram? Seems a lot of bright pple here, would appreciate the help.

  14. Tets


    This article must be a few months old. Right now in Kenya we have M-PESA service (by Safaricom) boasting of over 3M members where people are now able to transfer their funds via their mobile phone for almost ridiculous service charges. And the numbers keep rising.

    A few of us have even managed to develop a platform for using this service in order to transact online – integrating web and wireless – so as to bring the idea of e-and m-commerce home in Kenya and EA in general.

    This means, just like with PayPal, you will be able to load your account with cash and in addition to purchasing items and services online, you will be able to send money to one via the phone. All the recipient needs to do is to go to the nearest agent and cash the transaction. And with Kenya currently holding over 15M mobile phone holders, this is certainly set to be one of the best showcases of mobile-cash in Africa and the world over.

    Cool, huh?

  15. Anonymous

    Solutions for your funds transfer:am a resident at US and been remitting funds to my siblings,friends,my account and my parents through an agent of a firm.I usually call Washington Connections LLC on +1253256074 who have their branch agency-Valley Overseas Services based at Viewpark Nairobi who do the remittance very prompt…

  16. hash

    So, has the advent of Mpesa and Zap not lowered the transaction cost for the other options? Are we still talking 15% with the likes of Western Union?

    As an aside, if Zap or Mpesa were to open up a 3rd party developer API, they would see even more growth.

  17. John

    There is a new money transfer service that allows Kenyans in the diaspora to send money and recipients of the money get it in their Mpesa accounts.
    I have used it and found it to be quite handy.
    Check them out

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