The Central Bank of Kenya (CBK) is developing a financial sector-wide interoperability solution, known as the Fast-Payment System (FPS), aimed at integrating key aspects of payment services across financial institutions.
The FPS will allow customers to send and receive money instantly, anytime and anywhere, regardless of the financial institution they use. To bring this project to fruition, the CBK has established a Technical Working Group (TWG) comprising industry players, tasked with designing, launching, and rolling out the system.
According to a CBK statement, “This progress has been facilitated through consultations since February 2024 between CBK, the Kenya Bankers Association (KBA), Payment Service Providers (PSPs), and banks. The FPS development is in line with the Central Bank of Kenya Act, which mandates the CBK to implement policies promoting efficient and effective payment, clearing, and settlement systems.”
The FPS will align with global best practices, building on efforts that began in 2014 when East African Community (EAC) Partner State Central Banks initiated discussions on integrating regional card and mobile money systems. CBK has already made strides in enhancing payment system interoperability, including launching person-to-person (P2P) interoperability in 2018 and merchant interoperability in 2022.
However, existing interoperability systems face significant challenges, such as lacking a centralized switching mechanism, relying on costly bilateral agreements, and being closed in nature. These issues have hindered the development of a fully integrated payment ecosystem, adding costs and inconvenience to customers, and impacting Kenya’s position as a leader in payments innovation and financial inclusion.
“CBK and industry leaders are united in addressing these challenges to prevent duplication and reliance on fragmented domestic and international payment systems. Our goal is to lay the foundation for a fully interoperable Digital Public Infrastructure (DPI). CBK, in collaboration with the TWG, will provide further updates on the FPS launch timeline,” the statement added.
Once operational, the FPS will position Kenya among 57 countries worldwide that have implemented such systems, bringing the country closer to realizing the goals of the National Payments Strategy 2022-2025.
