The Central Bank of Kenya (CBK) has entered into talks with the National Payments Corporation of India (NPCI) to develop a Fast Payment System (FPS).
The platform will enable instant, secure, and affordable digital transactions between banks, mobile wallets, fintech apps, and government services.
“The system will be adapted to suit Kenya’s unique financial environment,” said an NPCI official involved in the discussions.
The proposed FPS will allow real-time money transfers between different financial service providers, breaking down the silos between banks, mobile money platforms, and fintechs.
When launched, users will be able to transfer money instantly, pay bills, shop online, and access government services, regardless of whether they use a bank app, M-Pesa, or another platform.
Inspired by India’s UPI Success Story
Kenya’s move is inspired by India’s Unified Payments Interface (UPI), a real-time payment system developed by NPCI that has transformed India’s digital economy.
UPI enables users to send money across banks and apps instantly using just a phone number or QR code.
Today, UPI handles billions of transactions every month and has become a model for countries seeking to modernize their payment infrastructure.
CBK hopes to replicate this success by building a Kenyan version tailored to local needs, with help from India’s technical expertise.
Can It Challenge M-Pesa’s Dominance?
M-Pesa, operated by Safaricom, remains the dominant player in Kenya’s mobile money space, accounting for over 96% of mobile transactions.
However, the new FPS could open up fair access to a shared, government-backed payment system for all financial service providers.
In response to growing demand for interoperability, Safaricom has already proposed integrating M-Pesa into the Pesalink network, which currently connects 39 Kenyan banks.
This could pave the way for cross-platform transactions even before the FPS officially launches.
Rollout Challenges
Despite the promise, building such a system will take time and investment. Estimates suggest the FPS could cost up to $200 million and take three to four years to fully implement.
To manage the platform, CBK is considering forming a Special Purpose Vehicle (SPV). The proposed ownership structure would be
- CBK: 60%
- Safaricom: 20%
- Commercial Banks: 20%
However, implementing this model will require legislative approval and alignment among key industry stakeholders.
If successful, the platform could reduce transaction costs, improve financial access, and ultimately provide a credible alternative to M-Pesa.
