The Central Bank of Kenya (CBK) has taken a significant step towards achieving financial sector-wide interoperability by announcing the formation of a Technical Working Group (TWG) to design, launch, and roll out a Fast-Payment System (FPS). This system will allow instant money transfers across the entire financial industry, facilitating seamless transactions between banks, Payment Service Providers (PSPs), and other financial institutions in Kenya.

Since February 2024, CBK has consulted with the Kenya Bankers Association (KBA) and various industry players, ensuring broad-based collaboration in creating this critical infrastructure. The FPS will allow customers to send and receive money instantly, regardless of the financial institution they use. This represents a crucial advancement in Kenya’s goal of improving financial inclusion and enhancing the efficiency of the country’s payment systems.

What the Fast-Payment System Means for Kenya

The FPS will integrate existing payment services, addressing long-standing challenges such as the lack of a centralized switching mechanism and the costly bilateral agreements that currently hinder full interoperability. Once in place, the FPS will remove barriers between payment platforms, significantly reducing consumer transaction costs and delays.

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This system will be based on global best practices, aligning with international standards for efficient and secure payment processing. According to the 2023 World Bank Global Payment Systems Survey, Kenya will join the ranks of 57 countries worldwide that have already implemented operational fast-payment systems.

The Road to Full Interoperability

Discussions around payment system interoperability in Kenya began as early as 2014 when the East African Community (EAC) Central Banks recognized the need to integrate regional card and mobile money systems. Progress has been made with the introduction of P2P interoperability in 2018 and merchant interoperability in 2022. However, these systems have been limited in scope and faced challenges due to their closed nature and costly bilateral structures.

The new FPS addresses these limitations by establishing an open and fully integrated Digital Public Infrastructure (DPI). Kenya will solidify its reputation as a leader in payments innovation by eliminating reliance on fragmented domestic and international systems.

What’s Next?

CBK will continue to work closely with industry stakeholders and the TWG, providing updates on the timeline for the launch of the FPS. Once fully implemented, the system will align with the National Payments Strategy 2022 – 2025 goals, positioning Kenya as a leading player in global payments infrastructure and reinforcing its role as a hub for financial innovation.