Corporate News
By MUGAMBI MUTEGI, pmutegi@ke.nationmedia.com
In Summary
Commercial banks’ plans to launch a mobile money transfer platform to rival Safaricom’s M-Pesa, Airtel and Orange Money have been hit by delays in receiving regulatory approvals.
The Kenya Bankers Association (KBA) had planned to launch
the Kenya Interbank Transaction Switch in August but has to date failed
to do so since none of its 43 members has received the go-ahead from the
Central Bank of Kenya (CBK).
The platform, which is to be operated by KBA’s
Integrated Payments Service Limited (IPSL), will facilitate direct
transfer of money between banks without going through M-Pesa or the
other telcos’ mobile money products.
This real-time, 24-7 service also promises to
cannibalise cheques, which take at least two working days to clear, and
payments made via real-time gross settlement systems (RTGS) which
process between 8am and 3pm on weekdays.
“Our goal was to launch the KBA Switch and enable
banks to provide the service to their customers this year (2016),” Nuru
Mugambi, a KBA director, said in an email response to the Business Daily’s queries.
“There have been some delays with product
development and approval. We now hope to realise this goal in the coming
weeks. We are working with the regulator to meet their requirements.”
Founded under the Central Bank of Kenya’s (CBK)
National Payment System (NPS) guidelines, the IPSL is expected to
interconnect all banks, cutting transaction costs while keeping the
revenue earned among the banks.
The switch company will be in charge of receiving
any new bank/branch registrations, monitor connectivity between banks
and act as an arbiter in case of any disputes.
The IPSL will also be in charge of registering
users for account-based transactions, setting up online configurations
for customer connection with banks and providing switches for
transaction authorisation.
The switch will furthermore provide guidance for processing fees and set up SMS and email notifications.
The Business Daily has learned that KBA
member banks submitted their product and system proposals to the CBK in
July ahead of the planned August launch date, seeking approvals.
Such authorisations, which are ordinarily issued
after a maximum of one month, are however yet to be issued, delaying the
launch of a product that promises to revolutionise the financial
services sector.
“We are undertaking an internal testing exercise in readiness for when the CBK approves the project,” said Ms Mugambi.
Commercial banks conceptulised the switch system
more than three years ago in the heat of financial pressure from growing
mobile money service providers, who have been eating into their
transaction fees revenue.
In a rare show of unity, the lenders resolved to set up their
own money transfer switch that will enable any mobile phone owner to
send and receive money without relying on any mobile money service owned
by telecoms operators.
The recipient of money transferred through the new platform
will receive a code from the sender and use the code to make payments to
another person’s bank account or withdraw the cash from banking
agents.
A key plank of the banks’ plan is to open the cash
by code service even to customers with no bank accounts. Users will be
able to bypass mobile money accounts such as M-Pesa or Airtel Money and
deliver the text directly to individual mobile phone numbers.
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