MTN Uganda has removed transaction fees on its mobile money service for payments and transfers valued below UGX 5,000, the telecommunications operator announced on Thursday. The change, which took effect immediately, applies to all person-to-person (P2P) and merchant payments made via MTN MoMo that fall under the new threshold.
The company stated that the initiative is designed to encourage the use of digital payments for everyday, low-value transactions, which are common in the informal economy. "We believe that by removing the cost barrier on small-value transactions, we can accelerate the adoption of digital financial services among all Ugandans," said Sylvia Mulinge, Chief Executive Officer of MTN Uganda. She added that the move aligns with the company's broader ambition of driving financial inclusion across the country.
Uganda's mobile money market is one of the most active in East Africa, with MTN MoMo and Airtel Money being the dominant platforms. The decision to waive fees on small transactions represents a strategic shift in a competitive landscape where customer acquisition and transaction volume are key metrics. Analysts note that such pricing adjustments can be used to deepen customer engagement and lock in users to a specific ecosystem for a wider range of services.
The policy change occurs against a backdrop of regulatory scrutiny on digital transaction fees in several African markets. In Uganda, the government and the Bank of Uganda have consistently emphasized the importance of affordable digital financial services as a pillar of national development. Reducing costs for low-income users is seen as a direct method of advancing financial inclusion targets, a priority shared by many regulators on the continent.
Mobile money has fundamentally reshaped financial access in Uganda, providing banking services to millions who lack traditional bank accounts. However, transaction fees have long been cited as a deterrent for using the service for very small payments, with many users preferring cash for amounts they deemed not worth the cost. MTN's move directly addresses this friction point, potentially converting a higher volume of cash-based micro-transactions into digital records.
The impact of the fee waiver on MTN Uganda's revenue from mobile money services remains to be seen. While fees from small transactions will be forgone, the company is likely betting on increased overall transaction volumes and higher customer retention to offset the loss. Furthermore, driving more users into its digital ecosystem creates opportunities for cross-selling other services, such as savings, loans, and insurance products offered through the MoMo platform.
Industry observers will be watching to see if competitors, particularly Airtel Money, respond with similar pricing strategies. A fee war on low-value transactions could further accelerate digital payments adoption but may also pressure the profitability of mobile money operations, which are significant revenue contributors for telecom operators. The development underscores the evolving nature of Africa's fintech landscape, where scale, affordability, and ecosystem building are increasingly critical for sustained growth.