How to calculate Mpesa commission is the question most people who want to become Mpesa agents always wonder. Well, worry no more about it. First things first before we dwell into the whole process of calculating Mpesa commissions when you are a Mpesa agent, let’s first explore what a Safaricom Mpesa is all about.
Presently, Mpesa has evolved into a vital part of our lives in Kenya as it allows us to send and receive money, carry out bank transactions, and make payments like school fees, rent, electricity, & shopping. Since 2007, Safaricom Mpesa has managed to stay on top of mobile money transfers with over 26 million active Mpesa users and over 150,000 Mpesa agent situated in different localities countrywide. Despite the popularity of Mpesa, not many are cognisant on its operations. This excerpt will offer a guide on how to calculate Mpesa commissions so that one can understand how Mpesa agents make a profit.
How do Mpesa Operate
Mpesa presents a hierarchical system of operation from a higher level (Bank) to lower rank agents and sub-agents. Most of us interact with the subagent dubbed as Mpesa shops where we do deposits or withdrawals. As such, this means that all these Mpesa shops operate under the principal agent. There are several primary agents whose duty involves managing some agents under them. Sub-agents perform an array of services including making deposits for clients, offering cash to clients who have withdrawn, and the registration of new Mpesa users.
How to Calculate Mpesa Commission
There are two central transactions done by a Mpesa gent. These include deposits and withdrawals. Both of these transactions will affect your Mpesa float and liquid cash. Mpesa float is the money in a sub agent’s account before doing any transactions. Whenever a client performs a Mpesa withdrawal what it means is that he or she has electronic cash and would like liquid cash. As such when the client withdraws the cash on their phone, it will be sent to your agent till and this will increase your Mpesa float and decrease your liquid cash. On the other end, Mpesa deposits are the opposite of withdrawal when a customer has liquid cash and would like it transformed into electronic money on his phone. As such, the client will give you the cash, and you will top up their number with the amount, the result is that your Mpesa float will decrease and your liquid money will increase.
Agents earn a commission from Safaricom whenever they make deposits or withdrawals for their clients. Even though clients deposit money into their accounts for free, Safaricom still pays commission to Mpesa agents performing this service. When the customer withdraws money, there are charged a fee depending on the amount withdrawn. This fee distributes to Safaricom, principal agent, and the sub-agent. As such sub-agents situated at strategic locations with the higher traffic of clients end up making a higher number of transactions; hence, earn more commission.
Safaricom Mpesa Commission Rates 2020
The Mpesa commission table 2020 presents new commission rates to ensure that Mpesa agents are awarded better pay on high-value transactions and also meant to motivate them to have an adequate Mpesa float.
Mpesa Commission structure for cash deposits
In 2018, deposit commissions have augmented by 12-170% across the 19 transaction bands. Furthermore, the new Mpesa agent Commission structure has introduced a Ks 0-Ksh 49 width band to increase small time transfers and payments by Kenyans. Additionally, 11 more width bands for deposits have added that prevent split and direct deposits done by dishonest Mpesa agents.
Here are 19 width bands for the various Mpesa deposit transactions as well as the commission earned by the Mpesa agent.
Mpesa Commission Structures for Cash Withdrawals
Safaricom also reviewed the withdrawal commissions offered to Mpesa agents increasing some bands, reducing some of the bands while keeping some bands constant. Safaricom aim of doing this is to encourage more agents to do deposit transactions. Why does Safaricom want to promote more cash Deposits? With electronic money on their mobile wallets, Mpesa subscribers can send the cash to other registered or unregistered users at a fee, withdraw it later and charged a transaction fee, buy airtime (a Safaricom product), pay for goods and services using Lipa na Mpesa at a fee. All this will benefit Safaricom; hence, the company is always looking for ways in which their customers can spend the cash on their Mpesa wallet. Initially, Mpesa was aimed at Customer to Customer transfers after depositing money you can send it to another who in turn will withdraw it a fee. But times are changing.
Depending on the amount withdrawn by clients, Mpesa agent’s stand to earn commissions in 2018 as present in this 19-band table. Please also note that the Mpesa commission structure deters the transfer of cash to unregistered users; hence, Mpesa agents should encourage people to register so that they can also benefit.
To conclude, Safaricom will pay all the monthly earned commission into the MMF account of the Mpesa agent less the5% withholding tax. The Mpesa agent, in turn, can decide to withdraw the cash or plow it back to their Mpesa float.