A joint report by Safaricom and the Kenya Bankers Association (KBA) has expressed concerns over the Central Bank of Kenya’s (CBK) plan to develop a fast payment system (FPS).

The proposed system, aimed at enhancing interoperability and reducing transaction costs, is estimated to cost at least $200 million and take up to four years to complete.

Safaricom and KBA argue that the FPS could duplicate existing infrastructure, leading to inefficiencies and slowing innovation in Kenya’s financial sector.

Instead, they recommend enhancing existing payment systems, such as Pesalink, which is already used for peer-to-peer payments between banks.

A key concern raised by KBA and Safaricom is the proposed Special Purpose Vehicle (SPV) to manage and operate the FPS. The SPV would be owned by the CBK, Safaricom, and commercial banks, requiring legislative amendments and an initial investment of $30 million. This structure could introduce bureaucratic delays, slowing innovation.

The report also highlights concerns about the suitability of the proposed FPS model for Kenya’s mobile money market. Platforms like M-Pesa and Airtel Money dominate the landscape, with billions of dollars in transaction value annually.

The proposed FPS model may not be suited to a mobile money-oriented market, as it is an unproven model in such a market.

As an alternative, Safaricom and KBA propose upgrading existing payment systems, designating an existing system as the primary operator of the FPS, and broadening its ownership to include CBK and other payment service providers.

Payment experts believe that the FPS will ultimately lower transaction costs and ease funds transfer across different platforms.

However, the debate over an optimal payment system highlights the delicate balance required to maintain Kenya’s progress in mobile and digital payments. The CBK is expected to issue further guidelines in the coming months.