M-PESA Paybill services have revolutionized how businesses in Kenya collect payments from their customers. Its convenience and near-universal adoption make it a crucial tool for businesses of all sizes. However, understanding the different M-PESA Paybill tariff options is vital for businesses looking to manage costs and optimize their payment processes. In this post, we’ll delve into the standard tariff structures available and how they impact both businesses and their customers.
What is an M-PESA Paybill?
An M-PESA Paybill is a dedicated virtual account that allows businesses to receive payments from M-PESA users seamlessly. Customers simply enter the business’s unique Paybill number, the amount they wish to pay, and their M-PESA PIN to complete the transaction. This streamlined process offers convenience for customers and real-time payment receipt for businesses.
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M-PESA Paybill Tariff Options
Safaricom offers several tariff options for businesses using M-PESA Paybill services. These options vary on how the transaction charges are distributed between the business and its customers. Here are the main categories.
- Mgao Tariff: With the Mgao Tariff, transaction charges are shared between the business and the customer. This option offers potential cost savings for businesses but could introduce a slight barrier for customers who are sensitive to transaction fees.
- Business Bouquet Tariff: In this model, the business bears all transaction costs. This fee structure is customer-friendly, as they don’t incur any additional charges when making payments. It can be a strategic option for businesses looking to incentivize M-PESA payments and enhance the customer experience.
- Customer Bouquet Tariff: The Customer Bouquet Tariff shifts the transaction fee burden entirely to the paying customer. This model might simplify a business’s accounting processes and ensure they receive the full intended payment amount.
| Min | Max | Mgao Tariff | Business | Bouquet | Tariff | Customer | Bouquet | Tariff | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Customer | Business | Total | Customer | Business | Total | Customer | Business | Total | ||
| 1 | 49 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 50 | 100 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 101 | 500 | 5 | 0 | 5 | 5 | 0 | 5 | 0 | 5 | 5 |
| 501 | 1,000 | 10 | 0 | 10 | 10 | 0 | 10 | 0 | 10 | 10 |
| 1,001 | 1,500 | 10 | 5 | 15 | 15 | 0 | 15 | 0 | 15 | 15 |
| 1,501 | 2,500 | 13 | 7 | 20 | 20 | 0 | 20 | 0 | 20 | 20 |
| 2,501 | 3,500 | 16 | 9 | 25 | 25 | 0 | 25 | 0 | 25 | 25 |
| 3,501 | 5,000 | 16 | 18 | 34 | 34 | 0 | 34 | 0 | 34 | 34 |
| 5,001 | 7,500 | 17 | 25 | 42 | 42 | 0 | 42 | 0 | 42 | 42 |
| 7,501 | 10,000 | 18 | 30 | 48 | 48 | 0 | 48 | 0 | 48 | 48 |
| 10,001 | 15,000 | 18 | 39 | 57 | 57 | 0 | 57 | 0 | 57 | 57 |
| 15,001 | 20,000 | 19 | 43 | 62 | 62 | 0 | 62 | 0 | 62 | 62 |
| 20,001 | 25,000 | 20 | 47 | 67 | 67 | 0 | 67 | 0 | 67 | 67 |
| 25,001 | 30,000 | 20 | 52 | 72 | 72 | 0 | 72 | 0 | 72 | 72 |
| 30,001 | 35,000 | 21 | 62 | 83 | 83 | 0 | 83 | 0 | 83 | 83 |
| 35,001 | 40,000 | 23 | 76 | 99 | 99 | 0 | 99 | 0 | 99 | 99 |
| 40,001 | 45,000 | 23 | 80 | 103 | 103 | 0 | 103 | 0 | 103 | 103 |
| 45,001 | 50,000 | 24 | 84 | 108 | 108 | 0 | 108 | 0 | 108 | 108 |
| 50,001 | 70,000 | 24 | 84 | 108 | 108 | 0 | 108 | 0 | 108 | 108 |
| 70,001 | 250,000 | 24 | 84 | 108 | 108 | 0 | 108 | 0 | 108 | 108 |
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Choosing the Right Tariff for Your Business
The best M-PESA Paybill tariff option for your business depends on several factors:
- Transaction Volume: If you process a high volume of smaller transactions, a Business Bouquet Tariff might be optimal to attract customers and minimize friction. However, for a lower volume of larger transactions, a Customer Bouquet Tariff or Mgao Tariff could be more sustainable.
- Price Sensitivity of Customers: Assess how sensitive your customer base is to transaction fees. If they expect fee-free payments, a Business Bouquet Tariff becomes more appealing.
- Accounting Preferences: Consider how you want to manage transaction fees within your accounting. A Customer Bouquet Tariff might offer the most straightforward accounting.
Important Note
The specific fee amounts and structures for these tariffs can change over time and may sometimes be subject to negotiation between Safaricom and individual businesses. Always contact Safaricom directly for the most up-to-date and accurate information for your business needs.
Conclusion
Understanding M-PESA Paybill tariffs is essential for Kenyan businesses to make informed decisions about their payment processes. By aligning your tariff choice with your transaction volume, customer preferences, and accounting needs, you can optimize costs while offering a convenient payment experience for your customers.