The number of SMEs in Kenya discovering the benefits of digitizing payments within their organization is increasing. Apart from using a mobile money account such as M-pesa, SMEs often also hold a bank account under one of the available banks in Kenya for several reasons. Although opening a bank account is done within a couple of days many SMEs are not fully aware or don’t understand the banking fees and banking charges in Kenya related to using and maintaining a bank account. Being aware of the different banking charges can lower banking charges and save SMEs money.
Banking charges
Often entrepreneurs opening a bank account for their SME only discover the full cost involved while using the bank account for withdrawals, deposits and requesting statements. FSD Kenya proves that doing a comparison between different banks before opening a bank account pays off and can save cost. With the Kenya Finance Act that came in place in 2018 banking charges even increased, making it more important and lucrative to do a banking charge comparison among banks for having a bank account under them. The act itself introduced a 20% excise duty rate on fees charged on money transfer services by banks and other fees charged by financial institutions. It also increased excise duty on fees charged on similar money transfer services by cellular mobile phone service providers to 12% up from 10%. When looking to open a bank account as a business it is only not so easy to compare the banking charges between different banks.
Price Transparency
Between banks in Kenya there is lack of standardised tariff information and how pricing should be organised and presented. In addition within banks itself there is confusion over the cost of different banking products and services. FSD Kenya’s research concludes that most bank staff were familiar with the cost of basic transactions, such as withdrawal and monthly ledger fees, but not for more complicated transactions such as the cost of bank-to-mobile wallet transfers, costs of mobile banking when using the bank’s app versus using the bank’s paybill, salary processing fees, transfers between different banks, etc.
Type of Costs
Comparing banking charges between banks for a SME bank account does pay off and lowers cost. When doing a comparison it is important that there is a good understanding of the type of banking charges that are associated with a bank account. Below is an overview summarizing the banking charges for opening, using and maintaining a bank account in Kenya
| Type | Type of charge | Cost |
| 1. Opening a bank account | One-off | Ledger fee
Minimum opening balance New ATM card |
| 2. Withdrawals | Per transaction | ATM withdrawals
ATM withdrawals OTC withdrawals Withdrawal to mobile Agent withdrawals |
| 3. Bank Transfers | Per transaction | Bank-to-mobile
Cheque EFT RTGS |
| 4. Maintenance | Monthly | Ledger fee
Mini-statements OTC ATM card replacement |
| 5. Closing a bank account | One-off | Closing fee
Ledger fee Final cash withdrawal (OTC) |
| 6. Switching bank account | One-off | Closing an account
Opening an account |
For a successful comparison it is important to take into account the frequency of usage in terms of transaction. The number of transactions needs to be multiply by the cost of the transaction to determine the cost of withdrawals and bank transfers. Some banks have a higher banking charge for opening a bank account but they charge a lower monthly maintenance cost and transaction cost, making it overall cheaper. By calculating the cost for each banking charge type, the total sum of cost per year can be calculated. Doing this for different banks gives eventually an overview telling which bank is most competitive is terms of pricing.