Pay service providers double on high digital uptake


The Central Bank of Kenya. PHOTO | DENNIS ONSONGO | NMG

The number of licensed payment service providers (PSPs) has doubled this year, as more firms look to take advantage of the sharp growth in digital commerce in the country.

The Central Bank of Kenya’s latest list of licensees shows a jump from nine firms at the end of 2021 to 17 as at the end of August, with four issued a permit last month.

In August, Craft Silicon Limited, Virtual Pay International Limited, Direct Pay Limited and Pesawise Services Limited were given their PSP licences by CBK, as per the filings on the regulator’s website.

They joined Finserve Africa Limited, Web Tribe Limited, Cellulant Kenya Limited and Kenya Airports Parking Services (KAPS) Limited in the list of those authorised to carry out the service this year.

PSPs are third-party companies that help business owners and individuals to process and execute a wide range of online payments— such as e-banking, mobile cash transfers, credit and debit cards payments and e-wallet transactions.

The use of bank cards to shop for goods and services has risen significantly in the last decade indicating increased consumer preference for the convenience of the payment option.

The Covid-19 pandemic also boosted prospects for those offering digital payment services, as more Kenyans adopted online shopping, and reduced the usage of cash as one of the ways of curbing spread of the virus.

For firms, use of cards and digital payments helps to cut cash management costs as the money is credited directly into accounts. It also makes accounting easier and results in fewer “missed purchases” since a lack of physical cash does not impede a sale.

Safaricom’s M-Pesa, the largest mobile money payment platform in Kenya, and Airtel Money Kenya Limited were the first to be registered as PSPs by CBK in 2016, followed by Telkom Kenya in 2018.

The country moved to bring the payments service providers under tighter CBK oversight from 2011, when the National Payments System (NPS) Act was enacted in 2011, followed by the publications of underlying regulations in 2014 which then required all providers to seek the CBK licence.

The need to put up strong regulations to govern the sector was informed by the rapid growth of mobile money in the country following advent of M-Pesa in 2007.

Last year, the government’s fiscal agent licensed three PSPs namely, Fivespot Kenya Limited, Viewtech Limited and Pesapal Limited.

In 2020, one firm— Integrated Payment Services Limited—was issued with its licence, while 2019 saw two licensees in Kenswitch Limited and Interswitch East Africa (Kenya) Limited.

Some of the authorised payment service providers have been mandated “to issue, process, store, send and facilitate mobile money payments,” according to the CBK.

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