Central Bank of Kenya boosts large payments via upgrade of system

The Central bank of Kenya, Nairobi. FILE PHOTO | DENNIS ONSONGO | NMG    

By KEPHA MUIRURI More by this Author

The Central Bank of Kenya (CBK) has boosted large value transactions represented by the Kenya Electronic Payment and Settlement System (KEPSS) by migrating the

platform to new global standards.

Dubbed the ISO 20022 message standards, the switch is expected to transform the exchange of financial messages by embedding richer data on the transfers as well as increasing accuracy of vetting trading parties.

The richer data is expected to meet some long-term demand from customers including persons requiring more remittance information to be carried with the payment instruction or regulators and risk managers who want better assurance that screening and testing measures are effective.

For business managers, the higher standards, according to the world’s leading provider of secure financial messaging services Swift, will further enable business managers to mine payment databases for insights into customer preferences. Moreover, the upgrade offers improved operational efficiencies with the ISO 20022 messages leading to reduction in false alarms such as a party flagged as a potential criminal while they are innocent.

“This migration is being undertaken as part of implementing the National Payment Strategy 2022-2025 and to modernise the National Payments System to world class standards,” CBK said in a circular to CEOs of commercial banks and microfinance institutions. “CBK will continue to work closely with financial institutions to ensure a smooth migration to the standards.”

KEPSS is a Real Time Gross Settlement System (RTGS), meaning that transactions are usually cleared and settled on a c

The transfers are debited and credited in the commercial banks’ accounts held at CBK where lender hold required cash reserves.

The system is classified as important payment mode due to the value of transactions it processes and its impact on the economy.

KEPSS offers real time funds transfers and simple payments processes allowing large value transfers between banks.

At the same time, the system allows fund movement between cities while allowing customers to query the position of funds on a real-time basis.

Data from the CBK shows the KEPSS/RTGS system supported 7.8 million transactions last year with a gross value of Sh38.15 trillion.

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