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Kenyan Banks Advocate for Pesalink Upgrade
Kenyan commercial banks are urging the Central Bank of Kenya (CBK) to reconsider its plan for a new real-time payment system and instead, focus on enhancing Pesalink. Their proposal is driven by the potential to save time, reduce costs, and minimize disruptions in Kenya's financial market.
The Clash of Strategies: Building vs. Upgrading
The Kenya Bankers Association (KBA) has voiced resistance to CBK's ambition of launching a new Fast Payment System (FPS) from the ground up, as noted in an official letter. They argue that building upon Pesalink, a payment platform owned by KBA through Integrated Payment Services Limited, offers a swift and cost-effective path to achieving seamless transactions across the country’s financial institutions.
The Fragmented Payments Landscape
Currently, Kenya’s financial ecosystem is marked by its fragmentation. Mobile money services like M-Pesa and Airtel Money function separately from the traditional banking systems, frequently leading to barriers for both businesses and customers who must navigate multiple platforms for transactions.
Meanwhile, Pesalink, despite facilitating person-to-person transfers among KBA’s members, faces significant limitations in giving users access to mobile money providers, thereby hindering a unified solution.
Historical Context and Background
Kenya's journey in digital payments has seen rapid innovation partly spurred by widespread mobile money adoption. What began as a novel concept has become a dominant force, processing over $300 billion in transactions in 2024 alone. Yet, as successful as mobile payments have been, their isolation from the banking sector remains a significant challenge.
This fragmentation paved the way for initiatives like Pesalink, introduced to streamline bank-mediated transfers, but it still struggles to integrate comprehensively across platforms—highlighting the critical need for cohesive solutions like the one CBK envisions with FPS.
The Future of Payments: Unified Platform Potential
The proposed FPS presents an exciting possibility: a unified platform enabling real-time transactions across banks, mobile wallets, and fintechs. Such a system could dramatically transform how businesses operate, consolidating payments into a singular, efficient channel.
This evolution from separate ecosystems to an integrated network could prove revolutionary, offering businesses and consumers alike a seamless experience in financial interactions. The question remains whether the upgrade of Pesalink could be a precursor to this larger ambition.
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