- Gross collections
- Direct charges
- Operating costs
- Cash received
Understanding Payment Gateway Fees in Kenya
Start by requesting an itemised quote for each payment method you plan to accept. Record charges triggered by a successful collection, fees billed separately and costs your own team will incur.
- Merchant Discount Rate (MDR): The percentage of transaction value charged for processing where the agreement uses this pricing model.
- Fixed Fees: Some gateways charge a fixed amount per transaction, especially for card payments or mobile money.
- Integration & Maintenance: Costs for initial API integration, ongoing updates, and dashboard management.
- Float and Settlement Delays: The time between payment collection and when funds are available in your bank account.
- Operational Labour: Manual work for reconciliation, failed payment retries, refunds, and chargebacks.
Merchant Discount Rate (MDR) and Quoted Fees
If the agreement deducts a percentage and a fixed fee from each successful payment, the simple calculation below shows the amount left before other adjustments. Ask whether the provider uses a flat fee, percentage, minimum, cap or separate invoice for each method.
Simple net amount before adjustments
Net amount = Gross payment – (Gross Payment × MDR) – Fixed Fee
Checkpoint: Check whether the quote includes applicable taxes and which additional charges are deducted or invoiced separately.
Gross to Net: What Reaches Your Kenyan Account
The amount you see on your dashboard after a customer pays is the gross amount. After MDR and fixed fees, the net settlement is credited to your account. For Kenyan e-commerce stores, it’s vital to reconcile daily settlements against your sales records.
- Check if the gateway provides a downloadable settlement report.
- Use transaction references to match confirmed collections to the settlement report. A customer receipt usually identifies the payment amount.
- For card payments, check if chargebacks or scheme fees are deducted separately.
Checkpoint: Schedule regular reconciliation between your bank, payment gateway dashboard, and accounting system.
T+ Notation and Float: When Do You Get Paid?
Payment gateways in Kenya use T+ notation to indicate settlement timelines:
- T+0: Settlement scheduled on the reference day.
- T+1, T+2, etc.: Settlement after the stated number of days. The agreement defines which days count.
For cash planning, measure the time between collection and when the funds are available for use. Check how the provider defines the reference day and whether the stated timing refers to funds sent or received. The formula below estimates the opportunity cost of cash during the delay.
Formula for Float Cost:
Float Cost = (Expected net cash × Days unavailable × Annual opportunity cost rate) / 365
Checkpoint: Clarify T+ terms with your gateway provider and factor float into cash flow planning.
Reconciliation Labour and Hidden Operational Costs
Kenyan businesses often underestimate the time spent on payment reconciliation. This includes matching gateway settlements to sales, resolving discrepancies, and handling customer queries.
- Manual reconciliation for M-Pesa STK push transactions or card payment batches can be labour-intensive.
- Failed transactions and partial settlements require follow-up with both the payment gateway and the customer.
- Some gateways offer API-based reconciliation, but human oversight is still needed.
Checkpoint: Assign clear roles for reconciliation and consider automation where possible to reduce errors.
Failed STK Push Retries and Transaction Failures
An M-Pesa STK Push can time out or be declined. Before sending a new prompt, check whether the previous attempt is still pending. Read how asynchronous confirmations move through the rails for the order-state implications.
- Ask which attempts, retries or notifications, if any, are billable under your agreement.
- High failure rates can lead to lost sales and increased customer support workload.
Checkpoint: Monitor STK push success rates via your payment gateway dashboard and optimise your checkout flow to reduce failures.
Refunds and Chargebacks: The Real Cost
Refunds and chargebacks are part of online payments in Kenya. A refund is money returned by the merchant. A card chargeback is a separate dispute process through the card issuer and acquiring side.
- Refunds may not return the original MDR or fixed fee to your account—check your gateway’s policy.
- Check whether the provider deducts a dispute fee and when it debits or reinstates the disputed amount.
- Ask what documentation the provider needs and when each adjustment appears in the ledger.
Formula for Refund/Chargeback Cost:
Handling cost = Fees retained + Additional case fee + Labour cost
Checkpoint: Track all refunds and chargebacks in your accounting system and review reasons for disputes to improve future processes.
Practical Checkpoints for Kenyan Teams
- Request a full fee schedule from your payment gateway provider, including all payment methods (M-Pesa, Airtel Money, Visa, Mastercard, bank transfer).
- Understand MDR, fixed fees, and float for each payment option.
- Clarify T+ settlement timelines and their impact on cash flow.
- Automate reconciliation where possible, but keep manual checks for exceptions.
- Monitor failed STK push rates and optimise your integration for seamless payments.
- Document refund and chargeback policies to avoid unexpected losses.
- Review your payment gateway dashboard regularly for discrepancies or unusual deductions.
When comparing quotes, run the same transaction mix and failure scenarios through each. The gateway selection guide provides scenarios for shops, SaaS, marketplaces and travel.