A recent report by Safaricom and Kenyan commercial banks highlights concerns over the Central Bank’s plan to develop a fast payment system (FPS), estimating a cost of $200 million (KES25.9 billion) and a four-year timeline for completion. The FPS is intended to improve interoperability in payment systems and reduce transaction costs. However, the report suggests that enhancing existing systems like Pesalink could be a more cost-effective and efficient solution, rather than creating a new system from scratch.
One major point of contention is the proposed Special Purpose Vehicle (SPV) to manage the FPS, with ownership divided among the CBK, Safaricom, and commercial banks. Safaricom and the KBA worry that this structure could introduce bureaucratic delays, hampering innovation in the financial sector.
Additionally, the report questions the suitability of the FPS model for Kenya’s mobile money market, which is predominantly digital and mobile-based. The proposal may not align with the current market dynamics where platforms like M-Pesa and Airtel Money dominate.
Instead of introducing a new system, Safaricom and the KBA suggest expanding the ownership of existing systems to include various stakeholders like the CBK, other payment service providers, SACCOs, and micro-finance banks. This approach aims to streamline payment processes and foster innovation in the industry.
Despite the ongoing debate, payment experts anticipate that the FPS will ultimately reduce transaction costs, facilitate fund transfers across platforms, and encourage innovation among service providers. The CBK is expected to release further guidelines in the near future, emphasizing the importance of striking a balance to support Kenya’s advancement in mobile and digital payments.