The Central Bank of Kenya (CBK) has announced plans to develop a financial sector-wide interoperable solution, aimed at enabling instant transfers across the entire financial industry. This initiative marks a significant step towards modernizing Kenya’s payment infrastructure and enhancing financial inclusion.
In a statement released on October 18, 2024, the CBK revealed that it has formed a Technical Working Group (TWG) in collaboration with industry stakeholders to design, launch, and roll out the envisaged solution, known as a Fast-Payment System (FPS).
The FPS will integrate various payment services offered by financial institutions, allowing customers to send and receive money instantly from anyone, regardless of their affiliated institution. This development comes after extensive consultations between the CBK, the Kenya Bankers Association (KBA), Payment Service Providers (PSPs), and banks since February 2024.
“The FPS will enable customers to send and receive money instantly from anyone, anytime, anywhere, regardless of the type of institution a customer belongs to,” the CBK stated in its press release.
The move towards a comprehensive interoperability solution stems from longstanding efforts to integrate payment systems within the East African Community (EAC). Discussions on enhancing interoperability began in 2014 when EAC Partner State Central Banks agreed on the need to integrate regional card and mobile money systems.
While Kenya has made progress in this area, including the launch of person-to-person (P2P) interoperability in 2018 and merchant interoperability in 2022, existing forms of interoperability face significant challenges. The CBK highlighted that current systems lack a centralized switching mechanism, rely on costly bilateral arrangements, and are closed in nature.
These limitations have prevented full participation of all players in the payments ecosystem and led to increased costs and inconvenience for customers. The CBK noted that these challenges have “affected Kenya’s global standing as a leader in payments innovation and financial inclusion.”
The development of the FPS is being undertaken under the mandate of the Central Bank of Kenya Act, which empowers the CBK to formulate and implement policies that promote efficient and effective payment, clearing, and settlement systems. The CBK emphasized that Kenya’s FPS design will align with global best practices.
The successful launch of the FPS will position Kenya among the 57 countries globally that have operational fast-payment systems, as reported in the 2023 World Bank Global Payment Systems Survey. The CBK views this development as a crucial step towards achieving the vision outlined in the National Payments Strategy 2022-2025.
While specific timelines for the launch have not been disclosed, the CBK has committed to providing further updates on the FPS rollout as the project progresses. The central bank emphasized that this initiative will lay the foundation for an open and fully interoperable Digital Public Infrastructure (DPI) in Kenya.
