- The Central Bank of Kenya (CBK) has migrated from the Kenya Electronic Payment and Settlement System (KEPSS) to the internationally recognised Global Messaging Standard (ISO 20022 Standard).
- This upgrade is expected to enable faster settlement times, streamlined processing, and improved liquidity management for financial institutions.
- CBK stated that the standard's rich data formats will aid in the detection and prevention of fraudulent transactions. The standardisation provided by ISO20022 — the latest international open standard for financial messaging — simplifies the payment process and significantly improves efficiency.
In February, the Financial Action Task Force (FATF), the anti-money laundering watchdog, grey-listed Kenya, citing deficiencies in dealing with money laundering and terrorist financing.
Meanwhile, CBK operates KEPSS, Kenya's Real-Time Gross Settlement (RTGS) system, to process high-value, time-critical payments. It is regarded as the foundation for Kenya's domestic and regional payment transactions.
The system reportedly processed over 5.3 million transactions valued at over Sh45 trillion for local currency transactions between August 2023 and August 2024.
CBK explained that “the ISO20022 Standard will enhance interoperability between domestic and international payment systems, facilitating easier cross-border transactions and increasing the ease of doing business globally. ”
The central bank has directed banks to inform their customers and provide necessary support to ensure seamless service.
This development aligns with Kenya's National Payments Strategy 2022-2025, which aims to support a payments system that addresses diverse customer needs, particularly financial inclusion and shared prosperity. It aims to improve the safety and security of the payment system by implementing relevant industry and global standards.
It also focuses on supporting a collaborative ecosystem that produces customer-centric and world-leading innovations while aiming to establish a supportive policy and legal and regulatory framework robustly enforced across existing and emerging players in the payments ecosystem.
This development puts Kenya alongside other regional and global economies, including South Africa in the adoption of ISO20022 Standard for large-value payment systems.
In September, 2024, Banks and microfinance institutions in Kenya were reported to have commenced a pilot program to test the enhanced payments messaging system to improve the speed and security of high-value financial transactions. All financial institutions engaging in cross-border payments are mandated to adopt the new standard by November 2025.
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