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Banks sucked into Sh1bn PesaLink patent row

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PesaLink can handle person-to-person transfers from as low as Sh10 to a high of Sh999,999. FILE PHOTO | NMG

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Summary

  • Stephen Muikia Njongoro, says that PesaLink bears similar salient features and components as an idea he had shared with the Kenya Bankers Association (KBA) in 2015.
  • He claims in court papers that the banks have raked in Sh2 billion from the money transfer platform and is claiming half of the earnings.

Kenya’s 30 banks are entangled in a legal suit in which a tech innovator is seeking Sh1 billion from the lenders, claiming that they used his idea to launch the interbank transfer service known as PesaLink.

Through senior counsel Tom Ojienda, Stephen Muikia Njongoro, says that PesaLink bears similar salient features and components as an idea he had shared with the Kenya Bankers Association (KBA) in 2015. He claims in court papers that the banks have raked in Sh2 billion from the money transfer platform and is claiming half of the earnings. “PesaLink bears similar salient features and components as my original expressed idea, which I had presented to the defendants way back in 2015,” said Mr Njongoro in court documents. “The second defendant has even shamefully used a substantively similar logo as that proposed by the plaintiff, as the trademark for its stolen PesaLink product”.

He has accused KBA of cashing in on the platform without his authority or granting him any royalties or compensation. The platform is offered by Integrated Payment Services Ltd (IPSL), a fully-owned subsidiary of KBA, and can handle person-to-person transfers from as low as Sh10 to a high of Sh999,999.

Mr Njongoro says that according to the KBA website, there are about 30 banks that use the payment platform which has more than three million registered accounts. He says that he spent resources to come up with the innovation and had hoped to commercialise his idea.

In the matter filed at the Commercial Division of the High Court in Nairobi, Mr Njongoro wants the case to be heard urgently, arguing that KBA has been illegally using his idea for commercial benefit. He is also seeking a temporary injunction stopping the use of PesaLink, arguing that the platform has infringed on his copyright.

Other than KBA, he has also named IPSL and the Central Bank of Kenya (CBK) as respondents in the case. He said he intended to create a platform where interbank transfers could be conducted in the comfort and at the convenience of one’s phone.

Mr Njongoro called his idea “All in one banking innovation” with the slogan “All in one, huduma zote za benki zote or lipa na benki yako”. The product was registered with the Kenya Copyright Board and issued with a certificate on February 2, 2015.

The innovator said he sold the idea to CBK, seeking guidance on how to introduce it to commercial banks in Kenya. In his court documents, he says that CBK advised him to share the idea with KBA. However, the bankers’ lobby group responded to him on July 2015, saying the innovation was not right for the banking industry.

KBA said the intra-bank transfer would be costly to customers, kill competition among banks and destroy bankers’ independent brands. Later, Mr Njongoro said he was puzzled to learn from a newspaper article that IPSL had rolled out a similar innovation known as PesaLink.

PesaLink was launched in February 2017 and had transacted Sh81 billion in the 17 months to August last year.

Kenya was among the first countries in the world to use such a platform, which was set up to rival telcos’ mobile money transfer services currently dominated by M-Pesa. KBA manages the switch and facilitates direct transfers without going through intermediaries such as M-Pesa, Airtel Money and Orange Money.