CBK To Tame Digital Payments Costs

 

By Kepha Muiruri For Citizen Digital

The Central Bank of Kenya (CBK) is expected to rein in on digital payment costs as it seeks to strengthen the national payments landscape.

In its next payments strategy covering the period 2022 to 2025, the CBK has outlined that it seeks to roll out pricing principals across digital and mobile banking services over the next one year.

The rollout of the principals is expected to facilitate choice and competition among various providers and services.

“The aim for this is to ensure that payment systems especially at the retail level enhance choice, competition and seamless payments across different payment channels and store of value,” read part of the strategy documents.

The CBK has highlighted several choice challenges related to the cost of transactions including the concentration of market power limiting choices to customers and costly payment channels such as Automated Teller Machines (ATMs).

Other strategic initiatives whose implementation varies in timelines over the four year surrounds the fostering of trust, security, usefulness, innovation and regulation.

In the bigger picture, the interventions seek to bridge the gap to universal financial inclusion with the rate of inclusion currently standing at 83 per cent.

This means that nearly two out of every 10 Kenyans are yet to be incorporated into finance and payment channels.

A section of Kenyans have been lamenting over the high cost of digital channels whilst calling for interventions to support the new payment channels.

The CBK has previously intervened on charges including the partial waiver on all fees for mobile-money transactions up to Ksh.1,000 while fees on transactions between bank accounts and mobile-money wallets remain frozen after March 2020 directives.

Payment Service Providers (PSPs) have also lowered some of their charges in response to customer demands.

For instance, Safaricom slashed mobile-money charges on its digital payments platform M-Pesa at the start of last year in response to probing by customers.

As the payment landscape evolves to include the emergence of new solutions such as cryptocurrencies, stable & alternative coins and Central Bank Digital Currencies (CBDCs), the CBK says it is moving to align itself with the changes.

“Undoubtedly, we have achieved a lot but much more needs to be done. Whereas the COVID-19 pandemic on one hand accelerated the pace of digitization, it has had scaring effects on lives and livelihoods,” CBK Governor Patrick Njoroge said on Wednesday.

“Nevertheless, broad access to secure and efficient payment systems will be important as we steer back to the path of shared prosperity for our citizens. While each of these innovations offers prospective benefits, there are inherent risks that need to be accessed carefully.”