The most popular payment methods in Kenya 2024: Cash is king but M-Pesa remains huge

In 2024, rising transaction charges and increased scrutiny by government authorities, including the Kenya Revenue Authority (KRA), prompted more merchants to shift to cash. According to Financial Sector Deepening Kenya, cash accounts for 80% of daily transactions in Kenya.

Small shop operators told TechCabal that they were now accepting cash over fears that KRA could use mobile money transactions to compel them to pay more taxes.

Is M-Pesa’s grip on mobile payments loosening?

Could M-Pesa dominance in Kenya’s payments ecosystem face disruption? The answer depends on whom you ask. However, data from the Communications Authority of Kenya (CA) and the Central Bank of Kenya (CBK) show that the telco’s iron grip on payments remains unshaken for now.

While rivals such as Airtel Money, commercial banks, and payments startups, are intensifying their efforts to disrupt M-Pesa’s reign, Safaricom’s position remains formidable. Those competitors are heavily investing in infrastructure, marketing, and innovative products to capture a larger share of the mobile payments market.

One of the most significant challengers to M-Pesa’s market dominance is Pesalink, a platform that allows real-time transfers to 39 commercial banks. Pesalink offers an attractive alternative for consumers seeking to conduct small cash transactions without relying on M-Pesa. Additionally, with lower transaction fees and enhanced mobile money interoperability in 2024, Airtel Money has also been gaining ground. 

Airtel Money’s market share grew from 2.8% to 6.6% in the 12 months to June 2024. It’s a notable shift in the mobile payments landscape,  signaling a softening of M-Pesa’s once-absolute dominance, which still commands 93.4% of the market.

Mobile money

In total, Safaricom and Airtel processed over 25 billion transactions with an estimated value surpassing $309.4 billion (KES40 trillion) between January and October 2024.  M-Pesa and Airtel Money remain the payment platforms of choice, especially for Kenya’s unbanked population. These platforms have become indispensable, especially for cash transfers in rural areas. 

Neighbourhood shops and small businesses are increasingly using both platforms for accepting payments, handling supplier transactions and paying utility bills for services like water and electricity. Daily transaction limits of up to $3868 (KES500,000), make M-Pesa and Airtel Money ideal for small-to-medium sized transactions.

Cheques and RTGS

While mobile money is dominant, traditional methods like cheques and the Real-Time Gross Payment System (RTGS) still play a crucial role in large transactions. From January to October 2024, cheques valued at $15.4 billion (KES2 trillion) were cleared, while RTGS transactions accounted for $21.6 billion (KES2.8 trillion). 

However, the use of cheques is on the decline. In June 2024, the value of cheques dropped 15.1%, almost matching the Covid-19 period when businesses remained closed following anti-government protests. 

Card transactions: Slowing growth in a mobile-centric economy 

The growth of card payments in Kenya has been sluggish. In the 10 months leading to October 2024, total card transactions—including POS payments and ATM withdrawals—amounted to $355.8 million (KES 46 billion). While this figure is substantial, it lags behind mobile money, reflecting Kenya’s strong preference for mobile wallets.

Debit cards remain the most popular cards in the country while credit card penetration stands at 5.6%.