Mobile Money Rwanda will effective September 1, charge merchants and businesses a 0.5 per cent commission on payment received through the popular payment mode.

The firm is currently communicating the development to merchants in readiness for implementation.

The fee comes days after the central bank scrapped charges and fees incurred when transferring funds from one’s bank account to their mobile money wallet and vice versa (push and pull charges).

The telco has defended the move arguing that before the Covid-19 outbreak, the fee was at 1 per cent before it was scrapped as part of measures to support uptake during the covid-19 pandemic.

Chantal Kagame the Chief Executive Officer of Mobile Money Rwanda Ltd said that the fee was there prior to the pandemic and had been removed to allow cashless uptake. She said that previously, the fee was at 1 per cent.

"We are setting the fee at a very low rate aware of the current times. Previously, we used to charge 1 per cent,” she said.

She added that transactions below Rwf4000 will be exempt from the charges exempting small-scale traders and motorcyclists.

She further defended the costs saying that it allows the telco to further improve and adjust the platform to avail further services and benefits to users such as microloans, insurance among others.

The charge she added will also cover cash in costs they incur where they pay agents about 0.7 per cent to agents.

On whether the costs were a response to the recent move by the Central Bank to scrap the charges and fees incurred when transferring funds from one’s bank account to their mobile money which saw them lose out on revenue, Kagame said it was not the case.

"The fees were supposed to be reinstated previously but we delayed (the reinstatement) as we were keen on supporting the market amid the pandemic,” she added.

She however noted that in the process of implementation, they will be engaging with partners and stakeholders to consider sectors where the fees could be exempted.

Merchants are not upbeat about the development saying that it could gradually lead to preference of cash which does not come with a transaction charge.

They said that the existence of a charge means that they are likely to either transfer the cost to clients or opt for cash all together.

Jeanine Mugwiza, an attendant at a neighborhood canteen said despite being a seemingly small charge, it could see her and other attendants prefer cash which does not carry a direct cost.

"We were used to using momo-pay for free, now that there is a cost, I am sure its appeal among most of us will reduce as no one wants to part with revenue,” she said.

There are over 50,000 merchants on Momo Pay in Rwanda.

MTN Rwanda has reported an aftertax profit of Rwf14.2 billion in the first half of 2021 compared to Rwf9.3 billion in the same period last year.