Sylvia Duruson
Central Bank of Kenya (CBK) has unveiled plans for a comprehensive Fast Payment System (FPS), marking a significant advancement in the country’s financial infrastructure. The new system promises instant transaction settlements across banks, fintech companies, and payment service providers.
CBK’s initiative addresses long-standing interoperability challenges in Kenya’s payment landscape. The system enables seamless money transfers and bill payments across different financial institutions. This development began in 2014 when CBK initiated discussions with industry stakeholders to research and develop the infrastructure.
Current interoperability solutions face several limitations. The absence of centralized switching mechanisms forces reliance on expensive bilateral arrangements. Closed system architectures prevent full participation from various payment ecosystem players. These restrictions result in higher costs for customers and impact Kenya’s reputation as a financial innovation leader.
The Central Bank emphasizes the importance of addressing these challenges. The initiative aims to prevent system duplication and reduce dependence on fragmented payment networks. The solution establishes foundations for an open Digital Public Infrastructure (DPI), fostering complete interoperability across platforms.
This development particularly impacts Pesalink, an existing payment switch created by Kenyan financial institutions. The service currently facilitates electronic transactions between banks. The introduction of FPS will reshape the competitive landscape for payment services, including established mobile money platforms like M-PESA, which gained popularity by filling the gap in rapid peer-to-peer payments between banks.
The CBK’s collaboration with industry leaders reflects a unified approach toward modernizing Kenya’s payment infrastructure. The Fast Payment System represents a strategic move to strengthen Kenya’s financial sector through improved technological integration. This advancement aligns with global trends in payment system modernization and digital financial services.
The initiative demonstrates Kenya’s commitment to maintaining its position in financial innovation. The new system promises to enhance financial inclusion while reducing transaction costs. By implementing this unified payment infrastructure, Kenya aims to create a more efficient and accessible financial ecosystem for all participants.
