Kenyan banks are ramping up efforts to regain control of the cash transfer sector in Kenya. The Kenya Bankers Association (KBA) wants to make sure payments via PesaLink under 1 million Kenyan Shillings (roughly USD 7,700) get transferred instantly. In a circular to members dated 21st March, KBA wants members to move payments under KES 1 million onto instant payment rails.
Payment rails are the infrastructure that moves money from one party to another. Thus, real-time payment rails enable instantaneous digital payments.
According to KBA, the recommendation “aligns with Kenya’s National Payments Strategy, set forth by the Central Bank of Kenya,”. KBA believes there is a rising demand for instant payments. Hence, Kenyan banks must respond to the market. This is part of the association’s strategy to “enhance customer satisfaction, drive growth, and foster ecosystem stickiness,”.
In 2023, PesaLink experienced growth in real-time digital transfers as the volume of account-to-account (A2A) transactions grew by 57%. For the same period, Real Time Gross Settlement (RTGS) transactions volume grew by 11%.
Despite the strong growth witnessed, PesaLink still lags behind mobile money platforms owned by telcos. Kenyans transacted Ksh.35.86 trillion through M-Pesa in the last financial year ending March 2023.
In addition, compared to other African countries, Kenya lags in bank-to-bank instant payments. KBA is championing a message of unity to push the growth of bank-to-bank payments. The association believes it can reclaim industry payments and deliver an open, instant, and interoperable system. By June 2024, all banks will transact through PesaLink, solidifying its industry-wide benefits.
Integrated Payments Service Limited (IPSL) is the real-time payment services company of KBA. It was established in 2015 under the National Payment System (NPS) Act. Its ecosystem consists of banks, payment service providers (PSPs), savings and credit cooperative societies (SACCOs) and a telco (Telkom Kenya).
In its push to dislodge Mobile money platforms, IPSL announced it will soon have a merchant payment option to rival Safaricom’s Lipa na M-pesa.
