BANKING | Central Bank of Kenya to Introduce New Instant Payments System in Line with 57 Countries Globally

The Central Bank of Kenya (CBK) has said it has made progress towards the realization of a financial sector-wide interoperable solution that will enable instant transfer of payments across the entire

financial industry.

According to the apex bank, the progress has been made possible through recent consultations that have taken place, since February 2024, between the CBK, the Kenya Bankers Association (KBA), various Payment Service Providers (PSPs) and banks (‘financial institutions’).

“The financial sector-wide interoperability solution – also known as a Fast-Payment System (FPS) – will integrate certain aspects of payment services that are offered by financial institutions. FPS will enable customers to send and receive money instantly from anyone, anytime, anywhere, regardless of the type of institution a customer belongs to.

Development of the FPS is being undertaken pursuant to the Central Bank of Kenya Act that mandates the CBK to formulate and implement policies that best promote the establishment, regulation and supervision of efficient and effective payment, clearing and settlement systems. Kenya’s FPS design will also be in line with global best practice.”

Moreover, the bank indicated that the move stems from an agreement among East African community (EAC) states to integrate regional card and mobile money systems. The move resembles the Reserve Bank of South Africa’s move to launch a new payment service called PayShap, South Africa’s first instant interbank digital payment offering for low-value payments.

The bank, which also recently moved Kenya’s Real-Time Gross Settlement (RTGS) system to the ISO 20022 Global Messaging Standard (“ISO20022 Standard”), indicated that existing forms of interoperability lack a centralized switching mechanism, use costly bilateral arrangements, and are closed in nature.

“These challenges lead to additional cost and inconvenience to customers and has affected Kenya’s global standing as a leader in payments innovation and financial inclusion.

CBK and industry leaders are aligned on the need to address these challenges to mitigate the risk of duplication, reliance on fragmented domestic and international payment systems and lay the foundation for an open and fully interoperable Digital Public Infrastructure (DPI).”

The bank says a technical working group has been formed to design, launch and rollout the envisaged solution.

The successful launch and rollout of the FPS will enable Kenya to join the 57 countries globally that have an operational FPS.