M-Pesa, PesaLink, and the CBK: The Battle for Kenya’s Financial Future

Kenya has one of the most dynamic financial systems in the world but there’s something about to change – the much-hyped partnership between the titan of mobile money, M-Pesa, and the real-time interbank payment system, PesaLink.

This collaboration looks exciting as two private giants join forces to simplify payments for over 30 million people. But is it?

M-Pesa integration with Pesalink looks to foster interoperability with benefits like faster transactions, broader financial inclusion, and enhanced convenience. However, it is well known that the two interact seamlessly with mobile money transfers and Paybill numbers being ubiquitous. It all looks like M-Pesa and PesaLink are solidifying their dominance to make themselves more indispensable in the country’s wider financial landscape.

This collaboration is happening now since the Central Bank of Kenya (CBK) recently announced plans for a Fast Payment System (FPS) that could significantly improve what PesaLink and M-Pesa are doing. This public infrastructure promises to directly bring instant, free, or low-cost transactions between wallets and banks, make financial services more equitable by reducing reliance on private platforms, and ultimately allow fintech companies to innovate without the barriers imposed by private giants thus showcasing the possibilities of open banking.

PesaLink and M-Pesa integrating will offer some convenience but will not address the root issues such as the high transaction fees that burden the everyday consumer, the limited competition that stifles innovation, and the lack of a truly one ecosystem where fintech companies can thrive in the country.

The Central Bank’s FPS could solve this and merchants could easily receive payments directly into their bank accounts and fintech companies won’t need to rely on M-Pesa as a gatekeeper all the while consumers get to enjoy seamless, low-cost financial services.

The FPS would be a system that democratizes financial access, be an infrastructure that invites competition and lowers costs, and become a platform that empowers fintech companies and enables open banking.

CBK getting FPS right(this solution is needed like yesterday) would set precedent not just for the country but across the continent by becoming a public system that levels the playing field and benefits everyone.

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