The Central Bank of Kenya (CBK) recently announced the launch of a Fast Payment System (FPS), a transformative initiative aimed at modernizing the nation’s financial infrastructure.
This system promises to provide instant transaction settlements across banks, fintech companies, and payment service providers, addressing long-standing interoperability challenges within Kenya’s payment ecosystem.
The FPS will allow seamless money transfers and bill payments between various financial institutions, a development that traces back to discussions CBK initiated in 2014 with industry stakeholders to create a robust payment infrastructure.
Currently, the Kenyan financial landscape relies on costly bilateral arrangements and closed systems, which limit participation and drive up costs for customers. The new system’s centralized switch aims to eliminate these issues, fostering a fully interoperable and inclusive Digital Public Infrastructure (DPI) for payments.
This shift also impacts existing systems, notably Pesalink, an electronic transaction switch for banks in Kenya. FPS introduces greater competition to established mobile money services like M-PESA, which gained popularity by bridging the gap in peer-to-peer payments across banks.
By providing a unified payment framework, CBK aims to streamline financial interactions, encouraging further technological integration across Kenya’s financial sector.
The initiative demonstrates Kenya’s commitment to maintaining its leadership in financial innovation. By reducing transaction costs and enhancing financial accessibility, FPS seeks to make Kenya’s financial ecosystem more efficient and inclusive, aligning with global trends toward modernizing payment systems. Through this strategic infrastructure overhaul, Kenya continues to build a more accessible financial future for all participants.