The Central Bank of Kenya (CBK) is working on developing a new instant payment system that will revolutionize the country’s money transfer network. Known as the Fast Payment System (FPS), this initiative aims to enable instant transactions across all financial institutions, including banks and payment service providers (PSPs). While the launch date for FPS has not been disclosed, it is expected to streamline financial transactions in Kenya significantly.
The FPS will empower Kenyans to pay bills, transfer money, and conduct various transactions seamlessly, regardless of their banking institution. This project is designed to address the interoperability challenges that have hindered efficient communication between different payment systems.
Pesalink, a payment switch introduced by Kenyan banks and financial institutions in 2015 to enhance interoperability, lacks a utility payments segment. With the upcoming launch of FPS, it remains uncertain how Pesalink will coexist alongside the new system once operational.
In early 2024, the CBK initiated discussions with industry stakeholders to establish a new payment system and set up a working group—CBK-Industry Technical Working Group—to spearhead its development.
The CBK envisions FPS as a platform that will consolidate various payment services offered by financial institutions, allowing customers to execute instant money transfers regardless of their banking affiliation. The aim is to create a seamless and efficient payment ecosystem for all Kenyans.
Over the years, East African countries have been exploring interoperability within their payment systems. The CBK made significant strides in 2018 and 2022 by achieving person-to-person and merchant payment interoperability, respectively. Numerous local banks now offer customers the flexibility to make utility payments and other transactions without being limited to a single payment channel.
Recognizing the limitations of existing interoperability solutions, the CBK emphasizes the need for FPS to provide a centralized switching mechanism, eliminate costly bilateral arrangements, and foster an open and fully interoperable Digital Public Infrastructure (DPI).
Upon its implementation, FPS is anticipated to enhance financial inclusivity for Kenyans and drive economic growth by facilitating faster payment processing.