Reducing transaction fees
Every time a customer pays via mobile money, you lose a percentage to transaction fees. For a small shop doing KES 50,000 in daily M-PESA transactions, those fees can add up to KES 15,000–25,000 per month , real money that comes straight off your bottom line. Understanding how these fees work is the first step to minimising them.
Understanding M-PESA Business Fees
Safaricom offers three main business products, each with different fee structures:
M-PESA Till Number , Best for walk-in retail transactions. The fee is a flat rate per transaction, not a percentage. As of 2026, fees range from KES 5 for small transactions to KES 150 for large ones. This makes Till ideal for small-to-medium payments where a percentage fee would hurt more.
| Transaction Amount | Approximate Till Fee |
|---|---|
| KES 100–2,500 | KES 5–15 |
| KES 2,501–7,500 | KES 25–45 |
| KES 7,501–15,000 | KES 60–75 |
| KES 15,001–70,000 | KES 100–150 |
M-PESA Paybill , Best for businesses that receive payments from many customers, especially remote payments. Paybill fees are typically higher than Till for small transactions but more predictable for large B2B payments. Paybill also lets customers pay via the Lipa na M-PESA menu using your business name.
M-PESA Pochi la Biashara , The newer option that allows merchants to receive payments directly to their M-PESA business wallet. Pochi fees are generally lower than both Till and Paybill for certain transaction sizes, and the money goes straight into a dedicated business wallet. However, Pochi adoption is still growing, so not all customers know how to use it.
There is a fourth option that many businesses overlook: M-PESA Send to Business (STB) . This allows customers to send money directly to your registered business number through the M-PESA menu. The fee structure is competitive, and the money lands in your business wallet immediately. It is worth adding this as an option for tech-savvy customers.
Choosing the Right Option for Your Business
For retail shops (groceries, clothes, hardware): Use Till for most walk-in transactions. The flat fee structure means KES 5 on a KES 500 sale is just 1% , far cheaper than card machines that charge 2–3%.
For service businesses (salons, clinics, consultants): Use Paybill. Customers often book and pay remotely, and the business name display builds trust.
For high-volume, low-margin businesses: Consider Pochi la Biashara. Lower fees on small transactions can save thousands per month.
The card machine question: Card payments cost 2–3% per transaction. Only keep a card machine if you serve tourists or corporate customers who insist on card. For everyone else, push them toward M-PESA.
Many Kenyan businesses make the mistake of using only one payment channel out of convenience. If you run a grocery shop, Till is your best option for the majority of transactions. But for large orders from schools or offices that pay via invoice, Paybill may be cheaper. The optimal strategy is to have all three options available and guide customers toward the cheapest channel for their specific transaction. A sign at your till that says "M-PESA Till: 123456 | Paybill: 789012 | Pochi: 345678" lets customers choose, but train your staff to suggest the lowest-fee option.
Hidden Fees You Might Be Missing
Beyond the obvious per-transaction fee, there are other costs associated with mobile money that eat into your profits:
Withdrawal fees. When you move money from your Till or Paybill to your personal M-PESA or bank account, you pay withdrawal fees. A KES 50,000 withdrawal from Till to your M-PESA costs around KES 110. If you withdraw daily, that is KES 3,300 per month in withdrawal fees alone.
Bank transfer fees. Moving money from your M-PESA business wallet to your bank account costs KES 30-100 per transfer depending on the amount.
Float costs. If you run out of e-float on your Till and need to buy from an agent, you may pay a premium of 1-2%.
Reversal fees. If a customer sends money to the wrong Till number and you need to reverse it, Safaricom charges a reversal fee.
The total cost of payment acceptance is higher than most business owners realise. This is why tracking every fee category is essential.
How SokoWise Helps You Track All Transaction Costs
Most business owners do not know exactly how much they lose to fees each month because the fees appear as separate deductions in their M-PESA statement. SokoWise automatically categorises every transaction fee so you can see your total cost per payment channel.
What you can do with this data:
- Compare actual fee percentages across Till, Paybill, and Pochi for your specific transaction patterns.
- Decide which channel to promote based on cost.
- Spot months where fees spiked and investigate why.
- Include fee data in your profit calculations so you know your true margins.
SokoWise also generates a monthly payment summary that shows total transaction volume, total fees paid, and effective fee percentage across all channels. With this data, you can make informed decisions. If you see that your effective fee rate is 2.5% and you know that Pochi offers 1.2% for your transaction profile, you have a clear incentive to shift customers toward Pochi.
Practical Strategies to Reduce Fees Today
While switching to lower-cost channels is the biggest lever, there are other strategies that can reduce your payment costs immediately:
Batch your withdrawals. Instead of withdrawing from Till to M-PESA daily, do it every two or three days. A single withdrawal of KES 150,000 costs KES 212 in fees, while three withdrawals of KES 50,000 cost KES 330. That is a saving of KES 118 per cycle.
Encourage M-PESA for small transactions. If a customer wants to pay KES 200 by card, the 3% fee is KES 6. That seems small, but multiply it by 50 such transactions per day and it becomes KES 9,000 per month. Train your staff to ask "M-PESA?" before reaching for the card machine.
Negotiate with your bank. If you have a business bank account with consistent deposits, ask your relationship manager about lower transfer fees from M-PESA to your account. Some banks offer preferential rates for businesses with high transaction volumes.
Review your channel mix quarterly. Your customers' payment preferences change. A channel that was optimal three months ago may not be optimal today. Spend 15 minutes each quarter reviewing your transaction data and adjusting your strategy.
Stop guessing what you are paying in fees. Start tracking with SokoWise. Learn more about SokoWise payments and collection features to reduce your transaction costs.