Kenyan commercial banks have started implementing the 20 percent excise duty on all bank transactions as stated in the new Finance Act 2018 amid confusion among customers on how much will be deducted during the transactions.
Most banks have already sent text messages to their customers, notifying them on the coming into effect of the charge on both over the counter transactions, ATMs and mobile transactions.
“Dear customer, in line with the Finance Act 2018, excise duty charged on all Bank fees and other money transfer services has increased from 10 percent to 20 percent effective immediately,” said Spire Bank in a text message to their customers.
The texts, however, failed to inform the customers on whether the amount will be deducted on the transacted amount or on the initial transaction fees.
Kenyans have been left to rely on unreliable news outlets such as blogs that have shocked some of them with the news that the amount will be deducted on the transaction fee which is not true.
The truth is, the 20 percent excise duty will apply on the charges that are often applied by respective banks. For instance, if a bank charged 200 shillings to withdraw 10,000 shillings over the counter, the fees will go up by 40 shillings to 240 shillings and not 2,000 shillings as some blogs are saying.
The excise duty will also affect transactions via ATMs. For instance, if a bank charges 55 shillings to carry out a transaction via an ATM, the fees will now go up by 11 shillings to 66 shillings. Banks have already started deducting the charges as outlined in the ACT.
Mobile money transaction excise duty has also gone up by 2 percent from 10 percent to 12 percent. For instance, withdrawing between 501 and 2,500 shillings via M-Pesa used to cost 27 shillings but is now at 28 shillings. Withdrawing an amount between 2,501 and 3,500 is now charged 50 shillings from the initial 49 shillings.