For Digital Payments to Scale, the Cost of Small Transactions Must Come Down, Says FSD Kenya

There is no doubt that recent technological developments have helped bring financial inclusion to more people, especially in developing countries like Kenya. These technologies, like the blockchain, have helped make financial products affordable.

For digital payments to scale however, the cost factor has to come down even further, according to FSD Kenya, a company that provides financial data into consumer insights, digital finance and credit services in Kenya.


The Average Transaction Size in Kenya is Under Kshs. 100

According to FSD Kenya, informal finance is incredibly important. Even for those in the formal finance space, a majority still use informal finance, and as a result, it becomes incredibly important to have an affordable and useful informal space.

According to Tamara Cook, Head of Digital Innovations, FSD Kenya, making transactions exceptionally cheap is key to any financial product uptake.

Tamara Cook, Head of Digital Innovations, FSD Kenya

In an interview with BitcoinKE, Tamara said:

“For things to be daily relevant, they’ve got to be super cheap. In our financial diaries research where we looked at the financial flows of Kenyan households, we see that the average Kenyan transaction size is under a hundred shillings.”

Companies like Safaricom have tapped into this need by launching affordable and super cheap services like the Kadogo tariff and free transactions fees when sending money below Kshs. 200. The free PesaLink tariff where transactions below Kshs. 500 are free also enabled the uptake of the service.

It is clear that any future payment services and platforms will need to offer free or very affordable transactions when transacting small amounts if they are to see any uptake in developing countries like Kenya.