The Kenya Bankers Association (KBA) has unveiled Integrated Payments Service Limited (IPSL) that will see them compete with Safaricom’s mobile money transfer service M-Pesa. IPSL is a fully-fledged payments technology delivery service firm and is part of a strategic effort to boost the banking sector’s interoperability and efficiency through affordable technology-based solutions.
The company will as well facilitate direct transfer of money between banks without going through M-Pesa. The establishment of the new firm will also provide a go-to-market platform via the Kenya Interbank Transaction Switch (KITS).
KBA chief executive Officer Habil Olaka described the platform’s launch was geared at harnessing digital payment solutions for the local market.
“The switch is exploiting a gap that has existed in the bank-to-bank payment system. It enables a P2P (person to person) funds transfer in real time where a customer in a bank can ‘push’ funds to the bank account of another in a different bank in real time,” Mr Olaka said.
The setting up of IPSL, Olaka added, is also part of a strategic effort by KBA to enhance ongoing financial inclusion efforts through diversified commercial banking delivery channels, including mobile and internet-based platforms as the country gears to become a cash-lite economy in line with the global digitization trends.
KBA has been registered as the owner of IPSL on behalf of all 43 banks and will remain the key driver of the Kenya Interbank Transaction Switch that will facilitate money transfer from bank to bank.
Founded under the Central Bank of Kenya’s (CBK) National Payment System (NPS) guidelines, IPSL is expected to interconnect all banks, cutting the transaction costs to customers while keeping the revenue earned among the banks.
The switch company will be in charge of receiving any new bank/branch registrations, monitor connectivity between banks and the switch as well as act as an arbiter in case of any disputes.
The company will also be in charge of registering users for P2P service (account-based transactions), setting up online interface configuration parameters (IP address, port) for customer connection with banks as well as providing routing switch for P2P transactions (authorisation process).
The switch will also maintain the look-up table, provide guidance for processing fees and set up SMS and e-mail notification template preparation for alerts.
Mr Olaka said the firm will inform policy direction and manage risks associated with electronic payment systems in the market, while providing technical and related guidance to KBA member banks.
As part of its operational strategy, IPSL, will soon be unveiling an interoperable, advanced person-to-person (P2P) payment solution. The solution is currently on its testing phase with a complement of more than 20 member banks participating in the User Acceptance Testing (UAT) trials.
Michael Mbuthia, IPSL Chief Information Officer, commented and said that the technology stack will ran a new generation interoperable payment transactions switching platform. The development of the platform, which will complement KBA’s existing clearing house, follows the recent signing of a financing agreement between KBA and Bank of Baroda, as the project financers.
Once complete, the IPSL system, will provide a safe, secure and cost efficient platform for person-to-person (P2P) money transfer. These transfers will be initiated from the five main bank channels: Mobile banking (USSD & Application), Internet banking, ATM, Branch front office, Agency Banking and POS.