Absa Bank Kenya has joined an industry-wide push to make bank-to-bank transfers cheaper, backing a Kenya Bankers Association initiative that slashes PesaLink transaction fees significantly. Under the new structure, transfers below Ksh 1,000 will be completely free, while transactions between Ksh 1,001 and Ksh 999,999 will attract charges as low as Ksh 20. The move is a direct challenge to mobile money platforms that have long dominated low-value everyday transactions in Kenya.
PesaLink allows customers to send money instantly between bank accounts across participating lenders. It has been available for years, but higher fees compared to mobile money options kept many consumers and businesses from making it their first choice for everyday payments. That is exactly what the fee reduction is designed to change.
Why Banks Are Moving on Fees Now
Kenya is one of the world’s most advanced digital payments markets, but mobile money platforms like M-Pesa continue to dominate low-value transactions. For banks, that dominance represents a gap in their relevance for everyday financial activity, particularly among consumers who send small amounts frequently.
Lowering PesaLink fees is a practical response to that competitive reality. When the cost of a bank transfer drops to zero for amounts below Ksh 1,000, the argument for using mobile money for those transactions becomes much weaker. Banks are betting that price parity, combined with the instant settlement and interoperability that PesaLink offers, will shift behaviour over time.
What Absa Says About the Initiative
“This initiative reflects our commitment to making banking simpler, more affordable, and more accessible for our customers,” said Absa Bank Kenya Consumer Banking Director Moses Muthui.
The statement reflects a broader shift in how Kenyan banks are positioning themselves. Rather than competing primarily on branch networks or product complexity, the focus is increasingly on removing friction and cost from everyday transactions. A customer who uses their bank account for daily transfers is a more engaged and more valuable customer than one who only logs in to receive salary.
Small Businesses Stand to Gain
Beyond individual consumers, small businesses are among the most significant potential beneficiaries of lower PesaLink fees. For a business making multiple payments to suppliers or receiving payments from customers daily, transaction costs add up quickly. Reducing those costs directly improves cash flow, and faster settlement through PesaLink means funds are available sooner rather than waiting for clearing cycles.
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Banks say the combination of lower fees and faster access to funds could meaningfully support business growth, particularly for micro and small enterprises that operate on tight margins and cannot afford to have money tied up in transit. The Central Bank of Kenya has consistently encouraged greater use of formal payment channels as part of its financial inclusion agenda, and this initiative aligns directly with that goal.
The Bigger Push for Financial Inclusion
Lower transaction costs do more than save money on individual transfers. They lower the barrier to using formal banking channels for people and businesses that previously found bank transfers too expensive for routine use. Every person who shifts regular transactions into the formal banking system becomes more visible to lenders, more able to build a credit history, and more connected to financial services that can support long-term economic progress.
That is the financial inclusion case behind the fee reduction, and it is one that regulators and development organisations have been making for years. The question has always been whether banks would act on it commercially. With this initiative, at least part of the industry is answering yes.