Central Bank of Kenya (CBK) has unveiled ambitious plans to launch a groundbreaking Fast-Payment System (FPS), poised to transform how money moves across the country’s financial ecosystem.

This new system promises to enable instant transfers between banks and financial institutions, regardless of the provider, opening a new chapter in seamless transactions for Kenyan customers.

In a bold stride towards modernising the nation's financial infrastructure, the FPS will integrate critical payment services offered by a diverse range of financial institutions. With this new solution, customers can expect to send and receive funds instantly, no matter which bank they use.

The system is set to remove the current barriers that make transactions across different institutions cumbersome and expensive.

This announcement follows the formation of a high-powered CBK-Industry Technical Working Group (TWG) earlier this year, in February 2024.

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The TWG, which brings together stakeholders from CBK, the Kenya Bankers Association (KBA), Payment Service Providers (PSPs), and various financial institutions, is spearheading the design and implementation of the FPS.

The move marks the culmination of efforts stretching back over a decade. In 2014, the Central Banks of East Africa’s partner states identified the need for a more unified and interoperable financial system.

Since then, significant steps have been taken, including the 2018 launch of person-to-person (P2P) interoperability and merchant interoperability in 2022.

Yet, despite these advances, the existing systems still fall short due to their fragmented nature and reliance on expensive bilateral arrangements.

CBK noted that the current limitations—such as the lack of a centralised switching mechanism—have led to increased costs and inconveniences for consumers, as well as restricted participation for players in the payments ecosystem.

With FPS, Kenya aims to address these inefficiencies by creating a fully interoperable Digital Public Infrastructure (DPI) that will offer a more inclusive, integrated payment experience.

Once implemented, this new system will place Kenya among 57 countries globally that already have operational fast-payment systems, according to the 2023 World Bank Global Payment Systems Survey.

The CBK stressed that the development of the FPS will be carried out under the Central Bank of Kenya Act, which mandates the bank to ensure the regulation and supervision of efficient payment, clearing, and settlement systems.

FPS will not only make the country’s payment services faster and more affordable, but it will also bring Kenya a step closer to realising the objectives outlined in the National Payments Strategy 2022-2025, a vision to create a more interconnected and dynamic financial sector.

With this new system, Kenyans can look forward to a future where transferring money is not only quicker but also more accessible and economical.

As the financial landscape continues to evolve, CBK’s push for a robust and fully integrated payment system is set to reshape the country’s economic foundations. The countdown to seamless transactions, lower costs, and a more unified banking experience has begun.