MTN MobileMoney suspends planned increase in cash out transaction fees

In a surprising turn of events, MTN MobileMoney Limited (MML) has decided to withdraw its previously intended increase in mobile money transaction fees. The announcement of this suspension was delivered via a Facebook post on Monday, June 26, 2023, with an assurance that the increment has been temporarily shelved.

A few days prior, MTN, a dominating player in the mobile money market, had notified customers via SMS about an impending fee modification, set to kick in from July 1, 2023. This change would mean transactions up to GHS2,000 would draw a 1% fee, with any amount exceeding GHS2,000 incurring a fixed charge of GHS20.

At present, a 1% fee is levied on amounts up to GHS1,000, with a maximum set fee of GHS10 for any amount beyond this. The anticipated increase hinted at a rise of the highest fee from GHS10 to GHS20 – a significant 100% surge.

MTN did not provide explicit reasons for this fee escalation. However, the mobile money agents within the country revealed that they were the instigators behind this plan. The Executive Secretary of the Mobile Money Agents Association of Ghana (MMAAG), Evans Otumfuo, disclosed that the fees for mobile money services, introduced in Ghana in 2009, haven’t been updated since inception. This lack of revision has resulted in stagnant commission rates for agents, despite the mounting inflation and operational costs.

In light of these circumstances, the agents issued a potential strike action if MTN didn’t respond to their plight. Consequently, a meeting with MTN led to an agreement for an upward adjustment of cash out transaction fees. This alteration would provide agents with additional revenue, assisting them in combating the fierce competition and escalating operational costs.

In anticipation of the planned increment, some agents have already imposed a limit of GHS1,000 per cash out transaction. Therefore, for withdrawals exceeding this limit, multiple transactions must be performed, allowing agents to earn from each batch.

Despite annual increases in mobile money revenue, MTN has remained indifferent to raising the commissions of its agents and merchants, focusing instead on training programmes and annual award events.

As of the end of last year, MTN reported a staggering 12.7 million mobile money users. The assumption is that with the growth of digital finance adoption, service fees should decrease to promote further usage. The decision of the market leader to increase a service fee in these conditions seems counterintuitive and burdensome for customers.

Of note is that MTN’s last suspension of a data bundle price increase eventually led to the implementation of the hike. It’s expected that in this instance, the Bank of Ghana, the industry regulator, will step in and offer guidance to resolve this issue without increasing service fees, especially when they are generally predicted to be on a downward trend.