Africa competition watchdog has launched a probe into allegations that Airtel Kenya lied to customers about mobile money charges and failed to disclose the foreign currency exchange rates for cross-border transactions.
The Comesa (Common Market for Eastern and Southern Africa) Competition Commission has issued a notice of the investigation and has asked other aggrieved travellers to come forward by February 28.
The notice follows a surveillance by the regional competition watchdog, which unearthed the possible breach of fair trading practices.
“The Commission, through its surveillance, became aware of possible violations of the regulations in the course of IMT (International Money Transfer) by Airtel Mobile Commerce BV through its subsidiaries in the Common Market,” said the watchdog in a notice seen by the Business Daily.
“In the case of Airtel Mobile Money Kenya, the charges displayed to the sender before confirming the transaction is, in some instances, different from the actual charges indicated in the final confirmation message and details of the intermediary parties, as well as the exchange rate used are not disclosed to consumers.”
Customers are expected to receive a warning of how much a transaction will cost before they confirm payment in efforts to boost transparency.
This follows directives from anti-trust regulators requiring telecom operators and financial services firms to disclose the fees and remove the opacity that has surrounded such charges.
The probe also covers Airtel’s operations in Uganda and Malawi.
The telecoms firm has operations in 14 African markets and is betting on the growing demand for mobile broadband and mobile financial services, including cash transfers and payments, to fuel its growth.
The investigation will seek to establish whether Airtel made false claims with respect to the price of goods or services.
The probe does not imply any wrongdoing on the part of Airtel Kenya or its operations in Malawi and Uganda and does not imply that the disclosures amounted to unfair business practices, the Comesa watchdog said.
Airtel Kenya said it could not immediately respond to a request for comment.
In Uganda, Airtel is accused of displaying the exchange rate for cross-border money transfers to the sender, which in some instances differs from the actual rate used.
The telecoms operator is said to have failed to disclose details of intermediaries and, in some cases, failed to provide details of the exchange rate used.
“This is likely to deny the sender evidence of full information of the transaction,” the watchdog said.
In Malawi, the charges involved were not disclosed to consumers and confirmation messages did not include details of the amount sent in the recipient’s currency.
“The alleged conduct is considered misleading and unconscionable as it denies consumers the right to material information required to make informed decisions,” said the watchdog.
“The Commission will, in accordance with the provisions of Part 5 of the Regulations investigate the matter to determine whether the alleged conduct has violated the regulations.”
Market share
The probe emerges at a time when Airtel Money is gaining subscribers in a market dominated by Safaricom’s M-Pesa.
Airtel Money's subscriber market share expanded to 7.6 percent in the three months to September 2024, up from 6.6 percent in June, chipping into the base of rival Safaricom's M-Pesa, whose dominance shrank to 92.3 percent from 93.4 percent.
The latest official data from the industry regulator shows that M-Pesa’s current share is the lowest since the agency started making the disclosures in September 2022, when the market leader enjoyed a 96.8 percent share against Airtel Money’s 3.1 percent.
Airtel Money’s current growth is an extension of a trend seen in the 12 months to June 2024, when the platform increased its market share in the country from 2.8 percent to 6.6 percent, while M-Pesa’s thinned from 97.1 percent to 93.4 percent.
M-Pesa’s latest dip came at a time when the total number of mobile money subscriptions in Kenya jumped from 39.8 million in June to a record 40.6 million in September, representing a penetration rate of 78.9 percent at the end of the period.
The number of registered mobile money agents, on the other hand, grew 5.1 percent during the quarter to 365,432 up from 347,699.
Airtel Money’s sustained expansion is the result of a concerted effort by Kenya’s second largest telco to expand the reach of its e-money offering, which has largely been hampered by a lack of adequate spread of agent networks.
Just last November, the telco inked a deal with supermarket chain Naivas, giving it access to the retailer’s expansive network of branches countrywide for use as Airtel Money agents.
In its statement at the time, Airtel said its mobile money customers would be able to deposit and withdraw cash at all Naivas branches in the country -- a strategy it said was aimed at expanding its agent footprint to get closer to customers.
Airtel Money’s expansion drive bagged its first major boost in 2023 after the Central Bank of Kenya (CBK) gave mobile money operators the regulatory approval to increase daily transaction limits to Sh500,000 from the previous limit of Sh300,000.
In February last year, Airtel moved to implement a transactional policy review that scrapped a code that forced customers on the Airtel Money platform to withdraw cash within a week of receiving it or risk the money reverting to the sender.
“This development effected on February 6, 2024, comes in response to the CBK and industry players’ collaborative efforts to ensure seamless mobile money interoperability as outlined in the CBK National Payments Strategy 2022-2025,” said Airtel then.
