From Sh47,400 fees to savings: Why small businesses are rethinking bank transfers

For a small business operating on thin margins, Sh3,950 can mean an additional stock order, money towards an employee’s salary or a little breathing room at the end of a difficult month.

But for one Kenyan business owner, that amount was disappearing every month in transaction charges alone.

The annual bill came to Sh47,400, paid simply to move money from a bank account to mobile money.

The business owner’s account highlights a recurring expense that can easily escape attention when entrepreneurs are already preoccupied with paying suppliers, meeting payroll, covering rent and managing customers who pay late.

The charges appeared small individually: Sh25 on one transfer, Sh65 on another. But adding them up revealed a much larger cost.

According to the account, the business made approximately 100 transfers a month, covering supplier payments, salaries and mid-month advances, transport, airtime, stock top-ups and other daily expenses.

Supplier payments accounted for 30 monthly transfers at an average fee of Sh65, costing Sh1,950. Another 10 transfers for salaries and advances, at Sh50 each, added Sh500.

A further 60 transfers for transport, airtime, stock top-ups and smaller expenses, averaging Sh25 each, cost Sh1,500.

Together, the charges totalled Sh3,950 monthly, or Sh47,400 annually across 1,200 transfers.

The impact becomes clearer when the charges are compared with ordinary business expenses.

At a monthly salary of Sh15,000, the annual transfer bill was equivalent to slightly more than three months of an employee’s pay.

At a 10 per cent profit margin, the business would need to generate an additional Sh474,000 in sales to earn back the Sh47,400 spent on transfer fees.

The account also equates the monthly charges to roughly one additional stock restocking order.

For a business struggling with cash flow, these are funds that could otherwise remain available for operations.

Unlike rent or stock purchases, transfer fees do not directly add inventory or expand the business. Yet they can accumulate because moving money is part of the daily routine.

The business owner described the expense as paying a tax for the “convenience” of accessing their own money.

The account says I&M Bank’s announcement that it would remove transaction charges on bank-to-mobile-wallet transfers for personal and sole-business customers prompted a rethink of banking costs.

The initiative, branded “Ni Sare Kabisa”, offered a way to reduce the expense without cutting stock, delaying a salary or changing the number of transactions required to run the business.

The business owner said they subsequently visited two banks in Nairobi and began closing accounts, questioning why they should continue paying between Sh10 and Sh65 per transfer when an alternative offered transfers at no charge.

Four months later, the owner reported saving approximately Sh15,800 in transfer fees while maintaining the same 100 monthly transfers.

That figure is close to four months of the stated Sh3,950 monthly cost, although the account does not provide transaction statements or an independent breakdown of the savings.

The case illustrates how reducing recurring expenses can help small businesses retain more of their existing cash flow.

Savings do not depend on increasing sales or persuading customers to pay faster; they come from eliminating a cost attached to transactions the business already makes.

However, the benefit depends on the transfers qualifying for the fee waiver, and the initiative does not address other pressures facing small businesses, including rising operating costs, delayed payments and access to affordable credit.

For entrepreneurs looking to establish how much banking costs them, the first step is to count their monthly bank-to-mobile-money transfers, check the applicable charges and multiply the monthly total by 12.

The calculation may reveal that fees which appear negligible one transaction at a time represent a substantial annual expense.

For the business owner behind the Sh47,400 calculation, the attraction of Ni Sare Kabisa was straightforward: the same business activity could continue while less money went towards moving funds between accounts.

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