CBK rejects bankers’ mobile money transfer; 22.03.2017

Mobile money From left: Kenya Bankers Association (KBA) vice chair John Gachora, PesaLink CEO Jenifer Theuri, KBA chief executive Habil Olaka and PesaLink information officer Michael Mbuthia. PHOTO | SALATON NJAU 

Summary

• CBK governor Patrick Njoroge said the Kenya Bankers Association (KBA), had initially pegged their mobile money transaction time at 40 seconds, which it deemed too slow.
• This prompted the financial regulator to direct the lenders to recalibrate their system for faster transactions as a condition for rollout.
• The directive will now send the commercial banks back to the drawing board, a move that could further delay the planned launch.

By NEVILLE OTUKI
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The Central Bank of Kenya (CBK) has directed banks to cut by half the time Kenyans take to transact on the lenders’ mobile money transfer platform, PesaLink, from the current 20 seconds before launch.

CBK governor Patrick Njoroge said the Kenya Bankers Association (KBA), representing 43 lenders, had initially pegged their mobile money transaction time at 40 seconds, which it deemed too slow.

This prompted the financial regulator to direct the lenders to recalibrate their system for faster transactions as a condition for rollout.

“We had this group of banks approach us with their mobile money transfer product. We asked them how long it will take to transact and they said 40 seconds. We send them back to cut the time. They came back with 20 seconds. We send them back again. The transaction time should be less than 10 seconds,” Dr Njoroge told participants at the just concluded Africa CEO forum in Geneva, Switzerland.

He was one of the panelists during the financial services session dubbed, Retail, banking, telecoms: the Fintech effect.

The directive will now send the commercial banks back to the drawing board, a move that could further delay the planned launch.

“They have to get their act together first before launch. Why should a simple transaction take 20 seconds?” Asked Dr Njoroge.

The KBA had planned to launch the service last August.

In February, six banks finally got the CBK’s greenlight, effectively putting them on the PesaLink platform, and the number grew to 23 lenders last week.

PesaLink is expected to rival telcos’ mobile money service currently dominated by Safaricom’s M-Pesa.

Customers using the platform will initiate transactions from the mobile phone, the banks’ branch, at the ATM, at agency banking outlets or via the Internet.

Dr Njoroge said mobile money service had deepened Kenya’s financial inclusivity to 87 per cent from 25 per cent in 2005.

“The past two years I have been in Kenya I have never stepped into a bank to transact. I conduct all my transactions on my phone,” he told the gathering in Geneva.

PesaLink, which allows account holders to transfer money across different banks, comes a decade after the inception of Safaricom’s M-Pesa in 2007, which was initially opposed by banks.

The lenders, however, later embraced mobile banking.

PesaLink, which in effect seeks to eliminate the M-Pesa mediation in the transactions, will also allow customers to transfer up to Sh1 million through mobile phones as opposed to M-Pesa which limits daily cash transfers to Sh140,000.

It is also expected to reduce reliance on real-time gross settlement (RTGS) systems that process payments between 8am and 3pm on weekdays, but reflect on receiving accounts after four hours or more.