Kenya’s Central Bank (CBK) is taking a transformative step toward enhancing the country’s financial landscape with the planned introduction of the Fast Payment System (FPS). Designed to tackle interoperability issues, FPS aims to streamline payments between financial institutions, including banks and payment service providers (PSPs). This system will facilitate instant transactions, allowing Kenyans to pay bills, send money, and conduct various financial operations seamlessly—regardless of the institution they are using.
Addressing Gaps in the Current Ecosystem
FPS builds on the country’s push for interoperable payment solutions that began with Pesalink in 2017. Pesalink, a collaborative effort by Kenyan banks, enabled direct payments between banks, mobile wallets, and financial institutions. However, Pesalink’s limitations—such as the absence of utility payments—highlighted the need for a more inclusive system like FPS. CBK’s strategy is to provide a centralized, open infrastructure, eliminating costly bilateral agreements and fragmented systems currently in place.
Progress and Stakeholder Collaboration
Interoperability has been a focus for East African nations since 2014, with Kenya making notable advancements in person-to-person payments (2018) and merchant payments (2022). Yet, challenges such as closed payment networks and reliance on non-standardized mechanisms remain. FPS is set to address these issues by creating a fully interoperable Digital Public Infrastructure (DPI).
In February 2024, CBK initiated conversations with industry leaders and formed a CBK-Industry Technical Working Group to guide the system’s development. This collaboration emphasizes the importance of mitigating duplication risks and strengthening local infrastructure to reduce dependence on fragmented domestic and international payment networks.
Strategic Importance and Economic Impact
FPS aligns with the National Payments Strategy (2022-2025), which emphasizes innovation, inclusion, and economic empowerment through efficient payment solutions. Instant payments under FPS will enhance financial accessibility, promoting economic activity by enabling faster cash flows for businesses and individuals. The CBK envisions that the system will lay the groundwork for a cash-lite economy, fostering innovation in financial services and reducing transaction costs for users.
FPS’s role will complement the country’s financial inclusion efforts, particularly as more sectors digitize transactions, including government payments and e-commerce platforms. As the system develops, questions remain about Pesalink’s future role and how it will integrate or pivot within the FPS framework.
A New Era for Payments in Kenya
The launch date for FPS is yet to be confirmed, but its development reflects the CBK’s commitment to modernizing Kenya’s financial ecosystem. Once operational, FPS will unlock new possibilities by enabling anytime, anywhere payments—positioning Kenya as a leader in financial technology within the region.
This initiative will not only benefit consumers through improved payment experiences but also position the financial industry for sustainable growth through reduced operational complexity and enhanced service offerings.
For further reading on CBK’s strategic direction, visit the official CBK National Payments Strategy (2022-2025) or TechCabal’s recent update on FPS developments.