Kenya's central bank to roll out an instant payments transfer solution

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October 18, 2024
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2 min read
Central Bank of Kenya
  • The Central Bank of Kenya (CBK) is looking to introduce a Fast Payment System (FPS), an interoperable solution for the instant transfer of payments across its financial sector.
  • Announcing the progress, the authority added it has moved to form a CBK-Industry Technical Working Group (TWG) to design, launch, and roll out the intended solution. 
  • According to the CBK, the FPS will combine various payment services provided by financial institutions, allowing customers to send and receive money instantly from anyone, anywhere, and from any institution.

This announcement comes days after the CBK migrated from the Kenya Electronic Payment and Settlement System (KEPSS) to the internationally recognised Global Messaging Standard (ISO 20022 Standard). Both the development of the FPS and the migration to the ISO 20022 Standard will help achieve Kenya's National Payments Strategy 2022-2025.

The authority disclosed that on making progress with the FPS, it had consulted the Kenya Bankers Association (KBA), various Payment Service Providers (PSPs), and banks since February 2024. Moreover, the CBK assured that Kenya’s FPS design will align with global best practices.

Improving payment system interoperability is not a recent development in Kenya or East Africa; it has been a priority since 2014. At the time, the East African Community (EAC) Partner State Central Banks emphasised the integration of regional card and mobile money systems.

Following consultations with industry players, the CBK made some progress in 2018, launching person-to-person (P2P) interoperability and merchant interoperability in 2022.

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However, existing forms of interoperability face challenges, including no centralised switching mechanism, overpriced bilateral arrangements, and closed systems, which hinder the development of an open and fully integrated system.

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"CBK and industry leaders are aligned on the need to address these challenges to mitigate the risk of duplication, reliance on fragmented domestic and international payment systems, and to lay the foundation for an open and fully interoperable Digital Public Infrastructure (DPI)," the CBK said.

While the authority has disclosed progress on the solution, updates on the FPS's launch date will be provided later.

Beefing up its national payment system comes as the authority welcomes more international financial institutions into the country. The US bank, JP Morgan Chase, recently obtained a banking licence in Kenya and has been authorised by the Central Bank of Kenya (CBK) to establish a representative office in the country.

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