The value of cash handled by mobile money agents, including those linked to banks and telecommunications firms, fell to a 34-month low in February, signalling a sustained shift in payment channels, heightened tax effects, and an overall tough economy.

Latest data from the Kenya National Bureau of Statistics (KNBS) shows that telco and bank agents transacted Sh633.35 billion in February, down from Sh699.64 billion in January, marking the lowest level since April 2023, when it was at Sh615.25 billion.

The decline captures transactions conducted directly on mobile platforms such as person-to-person transfers, paybill payments, and merchant tills, excluding cash deposits and withdrawals handled by agents.

This also comes at a time when Kenya’s payment infrastructure has undergone significant changes, with small-value transactions—such as paying for matatus or groceries—now increasingly done through mobile phones rather than cash, reducing the need for trips to agents to withdraw money.

Banks have also made a more aggressive entry into the digital payments space that was once the preserve of M-Pesa by charging lower fees than telcos in some cases.

Read: Mobile money transactions rebound to hit Sh8.7 trillion

The slowdown also points to reduced spending capacity among consumers, with households cutting back on discretionary expenditure and businesses seeing softer transaction values despite sustained usage of digital payment channels.

It is also a pointer to shrinking disposable incomes, particularly following the implementation of higher statutory deductions that have reduced take-home pay for formally employed workers.

“We have observed a notable drop in purchasing power. Part of this is attributed to an increase in NSSF deductions under Phase four of the 2013 Act, which came into effect on February 1, 2026,” Ken Gichinga, Chief economist at Mentoria Economics, said.

The latest phase of higher contributions to the National Social Security Fund (NSSF) has seen workers remit more toward retirement savings, tightening household budgets at a time when real wages have been under pressure.

Workers are now paying Sh2,160 more to the State-controlled pension fund starting February, as the fourth year of implementing higher mandatory contributions kicked in, raising the remissions to a maximum of Sh4,320, up from 1,080 in 2022, which was itself a raise from Sh200 previously.

This comes against a backdrop of multiple statutory deductions introduced in recent years, including the housing levy and the social health insurance contribution, which have collectively eroded disposable income.

The drop in mobile money transaction values suggests that while Kenyans remain active on digital platforms, they are increasingly transacting smaller amounts and prioritising essential spending.

Read: Mobile cash transactions drop for the first time ever

This behavioural shift mirrors earlier trends observed in agent transactions, where users split payments into smaller portions to manage costs and avoid higher transaction charges.

Businesses are also feeling the impact, as lower transaction values reflect subdued consumer demand, particularly in sectors reliant on high-frequency, low-margin digital payments.

Mobile money has become a critical backbone of Kenya’s economy since the launch of M-Pesa in 2007, enabling seamless transfers, bill payments, and integration with banking, credit, and savings products.

Over time, the platforms have evolved into full financial ecosystems, supporting millions of users and businesses, and processing trillions of shillings annually.

Follow our WhatsApp channel for breaking news updates and more stories like this.

kmwangi@ke.nationmedia.com