MTN cuts Mobile Money withdrawal charges

Telecommunication giant MTN Uganda has slashed the rates for clients withdrawing money over the mobile money network. 

In a notice, MTN said the lower fees prices took effect on November 2. The new rate schedule will see clients withdrawing slightly large sums of money pay a lot less in charges.

For instance, MTN will now charge sh13,000 down, from sh13,750 for withdrawing between sh500,001 and sh1,000,000. Those withdrawing between sh30,001 and sh45,000 will pay sh1,300 from sh1,350 charged previously.

MTN did not explain the reduction in fees but the move is expected to shore up its transaction volumes. 

"The 0.5% tax (of the transaction value) will be charged on all transactions. Do not pay any mobile money agent after a transaction. Fees are deducted directly from your phone," the notice read.  

In 2018/19, the government introduced a 0.5% tax on mobile money withdraws, a move which was protested by several users.

Meanwhile, Uganda Revenue Authority (URA) data indicates that the levy on mobile money contributed a deficit of sh 59.99 billion in the financial year 2019/20.

URA attributed this to the "fact that high-value clients withdraw their funds to agency banking." MTN Uganda revealed to URA that its mobile money transactions had dropped as customers turned to banks to avoid the tax.

"MTN has had a drop of 36% in mobile money transaction values in the first half of the financial year 2019/20. In addition, other clients are adopting the use of mobile money as a mode of payment for services as opposed to withdrawing for cash," URA said in a report.

Both the tax and the high fees by telecom firms made it too expensive for high-value clients to withdraw money using the platform.

The volume of mobile money transactions across networks grew to 3.1 billion compared to 2.5 billion in 2018/19, representing a 22% increase. This is according to the Bank of Uganda annual report for 2019/20 report.

Meanwhile, the value of transactions processed on the mobile money platform increased by 19.10% to sh79.7 trillion compared to sh66.9 trillion in 2019. The number of active users for mobile payments increased by 12.9 percent to 17.5 million in the year under review from 15.5 million in the previous year.