Safaricom and KBA aim to transform Pesalink into Kenya’s main fast payment system by integrating various digital platforms. This initiative seeks to enhance transaction efficiency and reduce costs amid a fragmented payment ecosystem, while requiring significant technical upgrades for security and processing capabilities.
Safaricom and the Kenya Bankers Association (KBA) have proposed enhancing Pesalink to become the central fast payment system in Kenya. The goal is to unify the country’s various digital payment platforms, resolving the current fragmentation within the financial sector. Currently, Pesalink processes around $8.5 billion in digital transactions, which provides a strong foundation for this expanded operational scope.
The existing financial ecosystem in Kenya requires banks, SACCOs, and fintech firms to engage in complex private agreements for mobile money connections. Alternatively, developing a new fast payment system is estimated to cost $200 million and take four years. Upgrading Pesalink is seen as a more efficient and cost-effective approach to modernizing Kenya’s payment infrastructure.
To realize this enhancement, Pesalink would need significant technical upgrades, including capabilities to process 6,000 transactions per second and robust security along with risk management systems. These enhancements would facilitate seamless transaction processing across diverse financial platforms such as M-Pesa, traditional banks, and fintech services.
Ali Hussein Kassim, Chairman of the Association of FinTechs in Kenya, has noted the potential economic benefits from such integration. A unified payment system would streamline transactions across various platforms, fostering the growth of the digital economy in Kenya and reducing transaction costs without compromising service quality.
While international comparisons show that some countries operate multiple payment switches, both Safaricom and KBA advocate maintaining a single, upgraded Pesalink system for better regulatory oversight and operational consistency. The Central Bank of Kenya is currently reviewing this proposal as more industry support emerges for the necessary infrastructure upgrades.
Pesalink, operated by the KBA’s fintech division Integrated Payment Services Limited, serves as a digital transaction platform in Kenya. With a current processing capability of managing substantial transaction volumes, it represents a key pillar in the strategy to streamline and enhance the country’s payment systems. The overarching objective is to create a cohesive financial environment that facilitates quicker and more secure transactions.
The initiative to enhance Pesalink into Kenya’s primary fast payment system reflects a strategic move towards unifying disparate digital payment platforms. By leveraging existing infrastructure, the proposal offers a practical solution that addresses inefficiencies in the current payment ecosystem while strengthening Kenya’s digital financial framework. The evolution of Pesalink could significantly impact transaction efficiency and user experience across the financial landscape.
Original Source: www.techinafrica.com
