Safaricom has moved to discourage transfer of money to third parties on its M-Pesa platform by subscribers of Equity Bank’s Equitel mobile payment service through new tariffs.

Safaricom says in correspondence seen by The EastAfrican that the increase will help in weeding out fraudulent transactions to third parties, especially those that are not registered with either M-Pesa or Equitel.

“It is our advice that you [Equity Bank] strongly consider only facilitating bank to M-PESA transfers to a customer’s own M-Pesa Account in order to discourage the occurrence of the aforementioned incidents,” writes Rita Okuthe, Safaricom’s general manager in-charge of enterprise business.

“In the event that you still prefer to facilitate third party transfers as a service offering then these transfers may still be pursued but subject to revised tariff rates,” Okuthe warns in the letter dated July 9 and addressed to Equity Bank.

For transfers from the bank to a customer’s M-Pesa account, however, Safaricom has introduced discounted rates of Ksh15 (15 US cents) for amounts ranging from Ksh50 ($0.47) to Ksh1,000 ($9.5) and Ksh22 ($0.22) for amounts between Ksh1,001 ($9.51) and Ksh70,000 ($665.37).

Tariffs for third party transactions have been increased on a graduated scale from Ksh22 for small amounts falling between Ksh50 and Ksh1,000 to a high of Ksh110 ($1.1) for amounts between Ksh20,001 ($190.11) and Ksh70,000.

Before the new tariffs took effect on August 1, Safaricom was charging a flat rate of Ksh33 (33 US cents) irrespective of the status of the recipient. A check with one of the commercial banks in partnership with M-Pesa for bank to customer transfers showed a higher flat rate of Ksh55 (55 US cents) obtains.

Safaricom had warned that the thin Sim technology would pose security challenges in the market but its pleas were dismissed by a parliamentary committee. Its bid to stop the launch of Equitel was also dismissed by the courts after the sector regulator and the Central Bank said such risks would be minimal based on experience in other countries.

Though Safaricom did not provide specific cases of fraud, it said there was an increase in the number of alleged erroneous or fraudulent transfers involving bank customers utilising the Bank to M-Pesa functionality.

“The increase in the number of these incidents has been attributed to the fact that customers are enabled to make direct M-Pesa transfers to the M-Pesa accounts of third parties. It becomes difficult and sometimes impossible to address the requests for redress that are increasingly directed to both Safaricom and the partner’s service centres by our mutual customers,” the letter says.