Safaricom, Kenya’s largest telecom, and commercial banks are once again making their case known. After submitting a report to the Central Bank of Kenya (CBK) stating that building a new fast payment system (FPS) could cost the apex bank $200 million and take four years, both parties are trying to convince the CBK that upgrading the Pesalink should be the way to go.
Safaricom and the KBA argue that improving Pesalink would be faster and cheaper than starting from scratch. However, a key concern is Pesalink’s transaction cap; the payment infrastructure, which currently allows only inter-bank transfers, supports $8.5 billion (KES1.1 trillion) in transactions, which raises questions about whether it can handle Kenya’s growing payment needs should other financial service providers come onboard. Compared to the payment infrastructure of some other African countries, this falls short.
Yet, this cap exists to manage liquidity, ensuring that banks have enough cash to settle transactions in real-time. Because their liquidity isn’t evenly distributed—bigger banks like Equity, KCB, and Co-op Bank have stronger reserves—smaller banks will struggle to process large payments quickly.
If Pesalink is upgraded and more financial service providers join, smaller banks will likely have to secure additional funding or seek access to central bank liquidity to process high-value transactions to avoid a liquidity shortfall.
Despite this, influential players in Kenya’s financial ecosystem still see the Pesalink upgrade as a win. It will immediately solve the country’s pressing lack of interoperability, a problem that has made it difficult to send and receive money across banks, fintechs, and mobile money operators.
The KBA is pro-Pesalink because the system is already bank-owned and operational, which banks see as a practical alternative to a completely new FPS. Yet, in all these talks about the Pesalink versus new FPS debate, there’s one notable omission in discussions: fintechs. Kenyan fintechs—over 100 of them—have yet to comment on the matter that affects them. This is likely due to the absence of a unified body to present their opinions—or they could be engaging regulators behind-the-scenes.
However, the talks concern them, but fintechs may not be speaking up to prevent scrutiny from the regulator.
Yet, the gavel is firmly in the hand of the CBK: like the proponents, does it see Pesalink as a long-term solution for Kenya’s payments? Or, will carrying the weight of building a new FPS and suffering the fragmentation problem for another four years give it the relief that it wants?
