The frequency of use of cards as a means of payments increased by nearly a million in the first three months of the year, latest official statistics show, signalling recovery from last year’s slowdown.
Central Bank of Kenya data shows the number of deals settled through card payments rose to nearly 54.43 million in the January-March quarter compared with 53.47 million in a similar period last year, reflecting a growth of 1.78 per cent.
The value of the card payments also increased by Sh6.99 billion to stand at Sh350.62 billion in the three-month period compared with same period last year.
Deals cut through payment cards fell by more than 1.51 million or 2.75 per cent in the first quarter of 2017 compared with the previous year in what the industry partly linked to fear of fraud among retail customers.
In fact, the volume of payment cards transactions in the review period was still far off the historic highs of 91.83 million in 2013 as retail customers have increasingly turned to mobile transactions, largely seen as more secure.
Victor Ndlovu, the country manager for Visa, the US-owned cards payments giant, said the biggest competition to cards is cash and not mobile platforms such as M-Pesa.
Nearly 90 per cent of transactions in the country are through notes and coins, Mr Ndlovu said in a recent interview, adding that there was more than enough to be covered by electronic payments.
“Most electronic transactions are mobile but most transactions in this country are in cash and that’s where the biggest opportunity lies,” he said on May 21.
“Kenya is at the forefront of leading that digital payments revolution and for us (card payments firms), that depends on how we push. With our partners we are getting aligned on how we need to push.”
About 34 of Kenya’s 42 banks have partnered with Visa for credit and debit payment cards, some of which it co-shares with rival Mastercard.
“If we do not come up with innovative products to address the current consumer needs, then cash is going to dominate for a long time,” Mr Ndlovu said.
“The old consumer was one that got cash from the ATM. What we are doing is to help consumers do all the transactions at their fingertips. The more we push, we more we will get to some point.”
Mobile transactions, however, continue to rule electronic transactions partly helped by easier accessibility with the number of agents increasing to 196,002 in March from 157,855 a year earlier.
The CBK data shows mobile payment transactions rose by 43.61 million or 11.70 per cent to 416.48 million in the January-March period compared with the same period last year.
The value of mobile payments rose to nearly Sh960.95 billion in the review period from Sh899.05 billion a year earlier, meaning the value of mobile deals is nearly three times that of payment cards such as ATM, debit and point of sale (POS) machines.
Banks have, however, contributed in pushing largely their retail customers to mobile transactions, with the February 2017 launch of PesaLink; an inter-bank payment system operated by Integrated Payment Services Ltd and a subsidiary of the Kenya Bankers Association.
“We expect electronic payments to continue to grow going forward because everybody is moving online and everything going mobile,” Robert Nyamu, Head of Financial Services at East African consultancy and audit firm EY said.
CBK prudential guidelines also require banks to strictly clear and settle payments of more than $10,000 (Sh1 million) through the Real Time Gross Payment System (RTGS) and the Kenya Electronic Payments and Settlement System (KEPSS).
Payments through the RTGS/KEPSS, however, fell by Sh373.05 billion to Sh6.63 trillion during the January-March period, attributed to a slowdown in economic activities which hit transactions by corporates.
“The dip was more of a transitory impact coming from the political instability in the last quarter of 2017, and we should expect RTGS payments to increase going forward,” Mr Nyamu said.