PesaLink announced a reduction in peer-to-peer transfer fees. It is, arguably, the easiest thing they could have done.
The decision to cut peer-to-peer transfer fees was the right call, and long overdue. For a bank-owned network trying to compete in a market M-PESA effectively dominates, charging fees was never sustainable. And after seven years, PesaLink only commands just 3% of the market while M-PESA holds the other 97%.
If PesaLink expects the fee cut to fundamentally change consumer behavior, then is pricing the only variable they need to consider?
Consumer payment habits are built on two things: convenience and cost. PesaLink has struggled on both fronts. The fee reduction addresses one while the more difficult problem remains untouched: the infrastructure underneath it.
Think of PesaLink as a well-engineered vehicle. The fee cut is like reducing the cost of the car. The roads it depends on, however, could still be uneven, bumpy, and in some places not fully connected at all. However, a cheaper car does not make a bumpy road feel smoother.
Consumer behavior is shaped by the entire journey, and for many Kenyans, that journey starts with significant friction long before PesaLink itself is ever used.
Consider who Kenya's financial system is increasingly serving. More than 80% of the population is under the age of 40; a generation shaped by smartphones, immediacy, and digital experiences that are expected to work in real time.
This demographic has very little tolerance for institutional friction, and banking, for the most part, has not fully adapted to that expectation.
The friction starts at account opening. Customers still encounter manual Know-Your-Customer (KYC) verification that takes days instead of minutes, minimum balance requirements that exclude lower-income users, and an inability to self-serve even basic functions — a forgotten password, an account query, a simple update — without calling the branch.
For a 24-year-old, in Kenya, who expects to open and use a bank account entirely from their phone, this is not a small inconvenience. It is often a reason to remain on M-PESA, and that is before users encounter the inconsistency across institutions themselves.
What works smoothly at one bank may not work at all at another. Individually, these frictions may appear manageable but collectively, they shape consumer behavior.
This is the deeper challenge facing PesaLink. The network itself may function well, but it inherits the fragmentation of the broader banking ecosystem around it. Each participating institution brings its own infrastructure quality, onboarding standards, and digital maturity into the network.
For some institutions, that means apps that time out mid-transaction, customer service that routes back to a branch, and account issues that cannot be resolved without a call or visit. In payments, the weakest experience often defines the user's perception of the entire system.
This is precisely why fintech apps have outpaced traditional banks and why users migrated to them in the first place. They understand that systems succeed when they remove friction from the entire experience surrounding the transaction, not just the transaction itself.
Financial institutions cannot win this market by competing on price or features alone. The real competitive advantage lies in eliminating friction across the entire customer journey. When onboarding, account management, transactions, and every touchpoint on the app becomes simple, fast, and reliable — consumers stop evaluating the product altogether. They just use it.
That is the standard PesaLink is ultimately being measured against, and the gap is not primarily about fees. Lower fees remove one legitimate barrier to adoption but pricing alone cannot solve onboarding fragmentation, inconsistent interoperability, uneven digital experiences, or the institutional complexity consumers still encounter across parts of the banking system.
It is about what consumers still have to tolerate, navigate, and wait through even before they can access the functionality PesaLink offers. Payment systems become dominant when the whole platform is effortless for the user.
For PesaLink to become genuinely competitive, the institutions behind it will need to treat infrastructure modernization as a collective responsibility rather than an individual one. Until the roads improve, the vehicle, albeit cheaper, will only go so far.