If you’ve ever paid a shop or restaurant using an M-Pesa till number and noticed no fee was deducted from your balance, that’s not a glitch — Buy Goods transactions have been genuinely fee-free for customers since Safaricom made that change back in 2018. But “free for the customer” doesn’t mean untaxed altogether. Here’s how the tax actually works on this specific transaction type, and where it differs from other M-Pesa services.
Buy Goods Is Free for Customers — And That Changes the Tax Picture
Unlike sending money, withdrawing cash, or paying a Paybill, Lipa na M-PESA Buy Goods (till number) payments carry no transaction fee for the customer, regardless of the amount being paid. Since Kenya’s excise duty on mobile money applies specifically to the transaction fee — not to the underlying amount being transferred — Buy Goods payments end up excise-duty-free on the customer side simply because there’s no fee for that duty to apply to in the first place.
The Excise Duty Instead Falls on the Merchant
The cost of processing a Buy Goods transaction doesn’t disappear — it just shifts to the merchant’s side of the transaction. Merchants pay Safaricom a transaction fee of roughly 0.5% of the transaction amount, capped at KES 200 per transaction, meaning a KES 10,000 payment costs the merchant around KES 50. Kenya’s excise duty on mobile money and payment processing services applies to this merchant-side fee, similar to how it applies to the fees charged on Send Money, Paybill, and withdrawal transactions.
What the Excise Duty Rate Actually Is
It’s worth flagging that current sources report somewhat inconsistent figures for Kenya’s exact excise duty rate on mobile money transaction fees — some describe it as 15%, others as 20%, with differing accounts of when and how it was last adjusted. What’s consistently agreed across sources is that this excise duty, introduced under Kenya’s Finance Act, applies to the fee component of mobile money transactions rather than the transaction amount itself, and it’s built directly into the displayed fee rather than shown as a separate line item — so whatever the current rate, it’s already factored into any fee you or a merchant sees on screen. Given the conflicting figures, it’s worth checking the current rate directly with Safaricom or the Kenya Revenue Authority (KRA) if you need a precise, verified figure for accounting or business purposes.
A Proposed VAT Change Nearly Affected Mobile Money More Broadly
It’s worth understanding recent regulatory context here, since it shaped a lot of 2026 conversation around mobile money taxation in Kenya. The Finance Bill 2026 initially proposed applying Kenya’s standard 16% VAT on top of the existing excise duty for mobile money transfer fees — a change Safaricom warned before Parliament could push the effective tax burden on a typical transaction from around 15% up to roughly 33%, disproportionately affecting low-income users who rely heavily on the platform. Reporting on the outcome suggests this specific VAT proposal did not move forward as originally drafted, with M-Pesa’s fee structure remaining largely unchanged heading into and through 2026 — though given how recently this was debated, it’s worth confirming the final, enacted position directly with Safaricom or KRA rather than assuming the proposal is permanently off the table.
Why Buy Goods Remains Structured This Way
Safaricom’s decision to keep Buy Goods free for customers, while charging merchants instead, was originally intended to encourage merchant adoption of digital payments back in 2018 — a policy that has held consistently since, making till-number payments the preferred method for supermarkets, restaurants, fuel stations, and most face-to-face retail transactions in Kenya specifically because it removes any payment friction on the customer’s side.
What This Means Practically
If you’re a customer using Buy Goods to pay for something, there’s no fee and no excise duty deducted from your M-Pesa balance — the amount that leaves your account is exactly the purchase price. If you’re a merchant accepting till payments, your merchant fee (capped at KES 200 per transaction) already includes whatever excise duty applies on Safaricom’s end, similar to how the duty is embedded in the fees for other M-Pesa transaction types.
Join The Discussion
Are you a merchant using a till number for your business, and how has the Buy Goods fee structure affected your day-to-day operations compared to Paybill? Share your experience, or if you followed the Finance Bill 2026 debate around mobile money taxation, what you think the final outcome means for Kenya’s broader digital payment ecosystem. If you need the current, verified excise duty rate for business or accounting purposes, it’s worth checking directly with Safaricom or KRA given some inconsistency in reporting — but feel free to ask here too, in case someone has a more current or authoritative source.
