Last week, Safaricom, Kenya’s largest Telco, published a joint report with the Kenya Bankers Association (KBA) where it estimated that building a new fast payment system (FPS) could cost $200 million and require four years to complete.
In that report, the telco argued that upgrading the Pesalink, which facilitates interbank transfers between 39 banks in Kenya, will save the Central Bank of Kenya (CBK) money compared to building the FPS. Following that report, Safaricom’s mobile money platform, M-Pesa is now set to join Pesalink.
Pesalink’s current infrastructure doesn’t support mobile money platforms. As a result, sending money from M-Pesa to a bank account is more expensive than bank-to-bank transfers via Pesalink. Also, M-Pesa users cannot receive money from bank transfers, revealing the flaw in Kenya’s fragmented payment system.
If M-Pesa joins Pesalink, it will make transfers between the mobile money platform and banks cheaper and seamless, helping the country achieve interoperability. The move will also usher in other Kenyan mobile money platforms like Airtel Money into the network.
Importantly, M-Pesa’s proposal could be a strategic move to convince the CBK to upgrade Pesalink instead of building a new FPS. M-Pesa is a widely popular payment service for Kenyans, with users processing more than 61 million transactions daily. Compared to banks, 69% of Kenyan adults do not have bank accounts.
This popularity will give fintech a vote of confidence and help fast-track its proposal as banks and other financial service players in the ecosystem see the advantages of onboarding M-Pesa. With M-Pesa as part of the network, a huge pool of Pesalink adopters will instantly be created.
