How payments ecosystem has evolved in Kenya

Card payments dropped marginally to Sh1.38 trillion last year compared to Sh1.39 trillion in 2016. FILE PHOTO | NMG
Card payments dropped marginally to Sh1.38 trillion last year compared to Sh1.39 trillion in 2016. FILE PHOTO | NMG 

In Kenya today, a consumer wants to swipe to pay at a clothing store, pay via mobile money at the grocery store, write a cheque for school fees, and pay cash at the fuel station.

This highlights the changing dynamics witnessed in the payments industry in Kenya and around the globe, with consumers and businesses using multiple channels, interchangeably.

We are now seeing the changing roles and innovations being employed by payment processors seeking to bridge the needs of consumers, retailers and SMEs at large.

Consumers want a seamless experience in making payments, and the choice to swipe, tap, scan or even use USSD messaging. Beside choice, consumers demand faster and cheaper payment services.

Gone are the days when supermarkets and other outlets had only one point of sale machine and would force those paying via card to line up to swipe.


Businesses are seeking innovations that allow them to receive and process payments from multiple channels. Retailers also want a helicopter view of all payments - solutions that integrate and reconcile in real time all payments received.

With Kenya’s formal retail market being the second biggest in sub-Saharan Africa after South Africa, the key role of payments cannot be understated.

The 2017 World Payments Report singles Kenya as a global leader in mobile payments solutions.

Kenyans transacted a total of Sh3.63 trillion ($3.63 billion) via mobile in 2017 according to Central Bank of Kenya (CBK) data.

Of this, roughly two-thirds of all the money moved on mobile was for retail payments: paying utility bills, shopping, dividends, and e-government services.

On the other hand, card payments in Kenya have been on a steady decline in the past decade, as adoption of mobile money takes toll on plastic.

Card payments dropped marginally to Sh1.38 trillion last year compared to Sh1.39 trillion in 2016, according to CBK data.

This puts the value of mobile payments in Kenya at nearly three times bigger than card payments. Also facing extinction are cheques, postal orders and money orders.

But banks’ real time payments platform dubbed the Kenya Electronic Payment and Settlement System (KEPSS) have been on upward trend - largely used by businesses via banks (RTGS) - growing 8.4 per cent to reach Sh29.1 trillion last year compared to Sh26.8 trillion in 2016.

Kenya is witnessing a mixed trend in payments where retail consumers have gone heavy on mobile, while businesses are integrating multiple payments channels under one view.

Take the example of diaspora remittances where consumers are now demanding to get their cash directly on mobile wallets, bank accounts or cash out at ATMs, without the hassle of searching for traditional agents.

We are also seeing a growing number of fintechs in Kenya’s payments processing ecosystem, an industry previously dominated by banks and multinationals. The benefits for retailers adopting a seamless integration of mobile money, point of sale, vouchers, and cash cannot be understated.

Such integrated platforms offer convenience to both retailer and buyers, and are deemed faster and cheaper. In today’s era of big data, such a unified view can be exploited to learn customer shopping behaviour.

An integrated payments history for retailers and mid-sized businesses can also be used in developing credit profile for retailers and mid-sized businesses.

This highlights the central role an effective payments processing industry can play to help entrepreneurs access both equity and credit financing.

Paul Ndichu, CEO Interswitch East Africa.