Safaricom and Kenya banks criticise CBK's Sh25.9 billion fast payment plan

A simmering debate has erupted between the Central Bank of Kenya (CBK) and two key players in the country’s financial ecosystem—Safaricom and the Kenya Bankers Association (KBA)—over a proposed Fast Payment System (FPS).

The ambitious Sh25.9 billion project, envisioned to enhance interoperability and reduce transaction costs, is being criticised for its hefty price tag and potential inefficiencies.

Safaricom and KBA, in a joint report, argue that building a new system from scratch is both costly and unnecessary.

Instead, they propose upgrading existing payment platforms, such as Pesalink, which already facilitates peer-to-peer bank transfers.

While they acknowledge the FPS could improve Kenya's payment infrastructure, they question the feasibility of a project that could take four years to complete.

The FPS would be managed by a Special Purpose Vehicle (SPV), a body owned by the CBK (60 per cent), Safaricom (20 per cent), and commercial banks (20 per cent).

However, the proposed structure has raised eyebrows, with critics warning of potential bureaucratic bottlenecks under the CBK’s majority control.

“The creation of an SPV may mean that streamlining regulations that would deliver immediate benefits within the current payment landscape may be delayed until the SPV and FPS are operationalised,” the report stated, cautioning that delays could stifle Kenya's renowned financial innovation.

Beyond the governance concerns, Safaricom and KBA highlighted a misalignment between the FPS model and Kenya’s predominantly mobile-driven payment market.

Platforms like M-Pesa and Airtel Money dominate transactions in a country where digital payments have largely replaced cash.

“It is a high-risk approach as it is an unproven model in a market where payments are predominantly digital and mobile-based. Most FPS implementations from other markets started when cash and/or card payments were dominant,” the report noted, casting doubt on the practicality of introducing a system designed for different market conditions.

Advocating for a more inclusive approach, the report recommended that existing platforms like Pesalink be expanded to include players beyond banks, such as SACCOs, micro-finance institutions, and other payment providers.

This model, similar to Zimbabwe’s, would integrate the CBK and other stakeholders into an established system, reducing costs and implementation time.

While payment experts agree that the FPS could unlock opportunities by lowering transaction costs and enabling seamless transfers, they also recognise potential challenges.

 Alfred Ongere, former chief technology officer at Payless Africa, remarked that the system could foster innovation but might also create hurdles for smaller players.

“It will create opportunities for smaller players but could also raise entry barriers for them. It will drive innovation in Kenya’s payments industry, with both small and large service providers pushed to offer better solutions,”  Ongere stated.

Kenya’s current payment infrastructure faces challenges of fragmentation.

Mobile money platforms operate largely in isolation, requiring separate agreements to connect with financial institutions.

Pesalink itself caters exclusively to banks, leaving out other entities like SACCOs.

The CBK has remained tight-lipped on whether it will pursue the FPS or prioritise upgrades to existing systems such as M-Pesa and Pesalink. 

As the country awaits the next move, the debate has sparked conversations about balancing modernisation with cost-efficiency while safeguarding Kenya’s global reputation as a leader in mobile money innovation.