Banks’ plan to set up mobile money transfer platform stalls


Nuru Mugambi, Kenya Bankers’ Association director of communications and public affairs. PHOTO | DIANA NGILA


  • The platform will facilitate direct transfer of money between banks without going through M­-Pesa or the other telcos’ mobile money products.

Commercial banks’ plans to launch a mobile money transfer platform to rival Safaricom’s M-Pesa, Airtel and Orange Money have been hit by delays in receiving regulatory approvals.

The Kenya Bankers Association (KBA) had planned to launch the Kenya Interbank Transaction Switch in August but has to date failed to do so since none of its 43 members has received the go-ahead from the Central Bank of Kenya (CBK).

The platform, which is to be operated by KBA’s Integrated Payments Service Limited (IPSL), will facilitate direct transfer of money between banks without going through M­-Pesa or the other telcos’ mobile money products.

This real-time, 24-7 service also promises to cannibalise cheques, which take at least two working days to clear, and payments made via real-time gross settlement systems (RTGS) which process between 8am and 3pm on weekdays.

“Our goal was to launch the KBA Switch and enable banks to provide the service to their customers this year (2016),” Nuru Mugambi, a KBA director, said in an email response to the Business Daily’s queries.

“There have been some delays with product development and approval. We now hope to realise this goal in the coming weeks. We are working with the regulator to meet their requirements.”

Founded under the Central Bank of Kenya’s (CBK) National Payment System (NPS) guidelines, the IPSL is expected to interconnect all banks, cutting transaction costs while keeping the revenue earned among the banks.

The switch company will be in charge of receiving any new bank/branch registrations, monitor connectivity between banks and act as an arbiter in case of any disputes.

READ: Kenya poised for another first in mobile money revolution

The IPSL will also be in charge of registering users for account-­based transactions, setting up online configurations for customer connection with banks and providing switches for transaction authorisation.

The switch will furthermore provide guidance for processing fees and set up SMS and e­mail notifications.

The Business Daily has learned that KBA member banks submitted their product and system proposals to the CBK in July ahead of the planned August launch date, seeking approvals.

Such authorisations, which are ordinarily issued after a maximum of one month, are however yet to be issued, delaying the launch of a product that promises to revolutionise the financial services sector.

“We are undertaking an internal testing exercise in readiness for when the CBK approves the project,” said Ms Mugambi.

Commercial banks conceptulised the switch system more than three years ago in the heat of financial pressure from growing mobile money service providers, who have been eating into their transaction fees revenue.

In a rare show of unity, the lenders resolved to set up their own money transfer switch that will enable any mobile phone owner to send and receive money without relying on any mobile money service owned by telecoms operators.

The recipient of money transferred through the new platform will receive a code from the sender and use the code to make payments to another person’s bank account or withdraw the cash from banking agents.

A key plank of the banks’ plan is to open the cash by code service even to customers with no bank accounts. Users will be able to bypass mobile money accounts such as M­-Pesa or Airtel Money and deliver the text directly to individual mobile phone numbers.