How COVID-19 has affected digital payments to merchants in Kenya

May 29th, 2020

This is clearly an unprecedented time. Over the past few months, the world has been battling the COVID-19 pandemic which has seen health systems burdened and unable to cope with the rising numbers of infected people. Measures put in place by the Government of Kenya in mid-March 2020 to contain the spread of the pandemic seem to have slowed down the rate of infection. While the extent of the impact of the novel coronavirus on Kenya’s economy is still evolving, it is evident that the impact has been disproportionately severe on small business and low-income households. Recently released findings show that only 3% of Kenyans can come up with KShs 8,500 ($85)—which is a twentieth of the country’s Gross Domestic Income—in seven days for a sudden need if required. This is significantly down from the same time last year.[1]

As part of the response to contain the spread of the virus, both the government and the private sector have put in place measures to encourage the use of digital payments while discouraging the use of cash. Specific measures include the zero-rating of both M-Pesa transfers below KShs 1,000 ($10) and all PesaLink (real-time bank account to bank account) transactions for a period of 90 days. Additionally, transfers from M-Pesa to bank accounts, and from bank accounts to M-Pesa have similarly been zero-rated.

Additional measures included the Central Bank of Kenya (CBK) approval for the increase of daily M-Pesa transaction limits from KShs 70,000 ($700) to KShs 150,000 ($1,500), specifically aimed at supporting small and micro business enterprises (SMEs). Kenyans are also now able to transact up to KShs 300,000 ($3,000), up from the previous limit of KShs 140,000 ($1,400) and hold up to KShs 300,000 ($3,000) in their M-Pesa wallets. A report released by the CBK indicates that these measures seem to be having the intended effect as shown by increased digital transactions and values.

Emerging evidence suggests that these measures are yielding direct and indirect impacts on the payments at the peer to peer payments (P2P) and merchant levels. The series of graphs below show the shifts in digital payments across merchant segments with February 2020 as the pre-COVID-19 baseline. February is used as a baseline rather than January as the latter is often atypical of normal volume and value trends, coming just after the December festive season. As such, the graphs indicate the average daily revenues collected as a percentage of the revenues collected in February 2020.

Figure 1: Total net effect of digital payments to merchants post-COVID-19

Source: Kopo Kopo internal data

Based on the COVID-19 situation in the last few months, digital payments were at their lowest in April with a rebound on the most part in May, except for hotels and resorts which continue to experience a sharp decline. The net effect for all the sectors together is a 16% decrease in digital payments to merchants.

Figure 2: Digital payments to merchants – operating above pre-COVID-19 levels

Source: Kopo Kopo internal data

This above graph shows merchant segments that are currently operating at above their pre-COVID-19 levels.  Key items to note:

  • A 54% increase in agricultural businesses and cooperatives digital payments – this may be due to the oncoming rains and planting season.
  • A 35% increase in food and grocery digital payments – this may be because people are being cautious about using cash for their everyday shopping.
  • A steep increase in digital payments to pharmacies which peaked in April and is now lowering.
  • Construction and contractors’ digital payments decreased sharply in March then started to rise.
  • Petrol, utilities, internet and pay TV digital payments – a 30% increase until April and now on a sharp decline.
  • A 21% increase in electronic, computer and mobile-related digital payments until April, followed by a plateau phase– this may be attributed to increased purchases as people settled into being (working/schooling) at home.

Figure 3: Digital payments to merchants – operating below pre-COVID-19 levels

Source: Kopo Kopo internal data

This above graph shows merchant segments that are currently operating at above their pre-COVID-19 levels.  Key items to note:

1. Tourism dropped by 56% in April, but the decline reduced to 39% in May.

2. A sharp decline of 94% in education-related digital payments due to the closure of schools.

3. Digital payments related to the hospitality industry in a continued sharp decline, reaching 74% in early May.

4. Payments related to restaurants and bars declined to 58% in April and then started increasing very gradually in May.

5. A 25% increase to charities in February as people supported the initial efforts to curb the outbreak and support those affected then a dramatic fall off which may be because people became increasingly concerned about their own financial futures.

What these charts represent is sample of transactions at a given point in time. As the impact of the pandemic is still unravelling, the trends in digital payments continue to change on a daily basis. The current trajectory could still shift depending on how long the pandemic endures and the measures taken to mitigate the impact to the economy such as safety net programmes and economic stimulus plans implemented by both the public and private sectors. Another factor that could impact the trends is the seasonal nature of some of the sectors such as agriculture and tourism. These are clearly unchartered waters that will require effort across the public and private sectors to produce holistic responses that work and are sustainable in turning the course of the ship.

Juliet Mburu is Senior digital payments specialist at FSD Kenya.


Mburu, J. (2020). How COVID-19 has affected digital payments to merchants in Kenya. Nairobi: FSD Kenya.

[1] See Jeoffreys-Leach, S., Berkowitz, B., Robertson, G., “Measuring COVID-19 impacts, mitigation and awareness in select low- and lower-middle income countries.” Available online at



FSD Kenya newsletter

Stay informed with regular updates from FSD Kenya

Subscribe to our mailing list

Our partners