Kenya Bankers Association (KBA) has launched Pesa Link, Cuts out intermediaries

Terry Gachie

8 years ago

Kenya Bankers Association (KBA) has launched Pesa Link, an inter-bank Mobile transfer service.

The platform targets mobile users and it will enable customers to transfer money from one bank account to another account in a different bank in real time.

Customers can transfer from as low as Ksh. 10 to as high as Ksh. 999,999.

Talks on the development of this platform had been ongoing for about five years before the launch.

The banking industry’s umbrella body launched the real-time interbank switch on Thursday the 16^th February 2017.

This comes at a time when intermediaries, especially Safaricom, have been benefiting from inter-bank transfer transactions.

With Pesa Link, mobile money transfer services will no longer act as intermediaries and this saves banks from transaction fees paid to intermediaries.

At the moment, only 12 Kenyan banks are on board but KBA is optimistic that more banks will be joining the bandwagon in coming months.

KBA officials have asserted that it has taken time for some banks to join the movement since their headquarters are in other parts of the world and protocol has to be followed when and if any investments are to be made.

The 12 banks that have embraced the Pesa Link and are approved by the Central Bank of Kenya are:

• Standard Chartered Bank
• Co-Operative Bank
• Barclays Bank
• Commercial Bank of Africa (CBA)
• I & M Bank
• Diamond Trust Bank
• Gulf African Bank
• Guardian Bank
• Victoria Commercial Bank
• Credit Bank
• Prime Bank
• Middle East Bank

Speaking during the launch, Habil Olaka, KBA’s Chief Executive Officer, stated that the decision to have an industry-owned mobile money transfer platform was an indication that the industry is embracing digital solutions for better financial services.

The transaction fees will differ from one bank to another. When asked about the transaction fee rates, Olaka dodged the question but instead chose to talk about other advantages of the platform.

In addition to mobile money inter-bank transfers, Pesa Link will enable customers to transact via ATMs, money agents, bank branches, and the various internet platforms.

Pesa Link will operate under the Integrated Payment Services Limited (IPSL), a subsidiary of KBA.

Pesa Link’s inter-bank services are the first phase since KBA is set to venture into the merchant payments and utility bills market in its second rollout.

This will not be a new thing since Equity bank has already rolled out Equitel which supports merchant payment services.

Currently, this service is dominated by Safaricom’s M-Pesa.

The launch of Pesa Link in Kenya comes at a time when technology is taking over various operations in the banking industry.

Banks have been forced to entrench technology in their various operations and this may explain why Pesa Link has been embraced.

James Gachora, KBA Vice chairman, confirmed this by saying that banks will need to continue innovating to stay afloat.

His views were seconded by NIC Bank CEO.

The signing of the bill limiting interest rates by the president came as a big blow for the banking sector.

This affected banks’ earnings; hence, these institutions are trying to put in place strategies to reduce costs of operation and ultimately make up for the lost revenue.

Going forward, it will be interesting to see the launch of other technological innovations that will disrupt the banking industry.