Kenya’s largest telecom, Safaricom, and commercial banks are advocating for upgrading the existing Pesalink system rather than building a new fast payment system (FPS). They argue that enhancing Pesalink would be a quicker and more cost-effective solution. However, concerns arise regarding the system’s transaction cap and its ability to handle Kenya’s increasing payment demands if other financial service providers join in.
The current transaction cap on Pesalink is in place to manage liquidity and ensure efficient settlement of transactions in real-time. If the system is upgraded and expanded to include more financial service providers, smaller banks may need additional funding or access to central bank liquidity to process high-value transactions effectively.
Despite these challenges, the upgrade to Pesalink is seen as a positive step in addressing Kenya’s interoperability issues and facilitating smoother money transfers across various financial institutions and mobile money operators.
While stakeholders like the Kenyan Bankers Association support the Pesalink upgrade due to its existing infrastructure, the involvement and impact on over 100 Kenyan fintech companies remain unclear. The debate between Pesalink and a new FPS raises questions about the long-term payment solution for Kenya and the potential challenges that both options may entail.