Kenyan industrial banks are opposing the Central Financial institution of Kenya’s (CBK) plans to develop a brand new real-time funds system from scratch, advocating for an improve to Pesalink as an alternative. They argue that enhancing the present system would save time, minimize prices, and minimise disruptions. 

In a letter seen by TechCabal, the Kenya Bankers Affiliation (KBA) urged CBK  to construct on Pesalink, the fee platform owned by the affiliation via its fintech subsidiary, Built-in Fee Companies Restricted (IPSL). The October 25, 2024 letter argues that leveraging Pesalink can be the quickest, cost-effective route to attain the regulator’s aim of making a seamless Quick Fee System (FPS). 

“This might see IPSL transition to a nationwide change, with substantive modifications in possession, governance, expertise, and enterprise mannequin to incorporate CBK, banks, Safaricom, Kenswitch, and different licensed fee individuals that the CBK would love integrated,” mentioned John Gachora, KBA chairman and CEO of NCBA Financial institution. 

On October 18, CBK unveiled its plan to develop the FPS, a system designed to allow prompt transactions throughout all monetary establishments, together with banks and licensed fee service suppliers. Whereas CBK has not introduced a launch date, industrial banks are pushing for a swift rollout, arguing that pace and cost-efficiency are essential to success. 

“In organising a profitable FPS, due consideration will must be given to: the pace of execution to create the FPS and join all gamers available in the market, the prices to create it, and for the varied gamers to configure their methods and operations to allow seamless transactions,” Gachora mentioned.

A fragmented funds panorama

Kenya’s funds ecosystem is at present fragmented, with cell cash platforms like M-Pesa and Airtel Cash working in silos from different monetary establishments. Whereas cell cash permits prompt transfers between Kenyan banks and digital wallets, it stays restricted to establishments which have agreements with suppliers. For instance, some banks and microfinance establishments don’t permit transfers to Airtel Cash wallets, creating boundaries for patrons. 

In the meantime, Pesalink provides P2P transfers amongst KBA’s 39 members, but it surely has vital limitations in integrating with fintechs and cell cash suppliers. Pesalink customers, for example, can not make funds to cell cash wallets, which restricts its use as a complete answer for digital funds.

This fragmentation has made it difficult for companies to consolidate funds right into a single account, as they need to handle a number of methods for card funds, cell wallets, and financial institution transfers. A unified fee system like FPS would permit retailers to just accept all types of digital funds right into a single account, much like how card funds work throughout platforms.

Cell cash dominates however stays remoted 

Regardless of the challenges, cell cash continues to dominate Kenya’s funds market. In 2024, cell cash processed over $300 billion, outpacing conventional strategies like cheques ($15.4 billion) and the Actual-Time Gross Fee System ($21.6 billion).

By making a unified nationwide platform for fast transactions, CBK’s FPS might be a game-changer, providing real-time, cross-platform funds that join each a part of the monetary ecosystem, from banks to cell wallets to fintechs.