A Leadership Moment in Kenya’s Financial Sector

Consider this;

- 90% of mobile money transactions are processed through the Mpesa platform.

- 90% of the market is dependent on transaction costs as set by Mpesa (A misnomer from a competition/market dominance point of view?)

- Mpesa is akin to an unofficial national mobile money switch, via its open API ecosystem.

Enter the proposed Kenya National Payments Policy 2022-2025, which stresses two things:

1. Interoperability amongst licensed fintechs/payment platforms without too many technical difficulties.

2. The creation of a neutral national central switch for settling transactions so that licensed players can bolt onto it, with a view to increasing efficiency, security, and reducing transaction costs. A framework closely akin to India's unified payments interface - for bank to bank, person to merchant, and person to person payments.

Questions:

1. If fully implemented, will the policy reduce the barrier to entry for fintechs, allowing them to connect to the national payment system, without necessary needing to rely directly on the Mpesa API ecosystem?

Why Kenya needs a neutral national payments platform.

Kenya's financial services sector is on the brink of a major transformation—one that will redefine payments and reshape the competitive landscape.

Across the world, and increasingly in Africa, central banks are spearheading the rollout of unified, neutral national payment systems.

Countries like South Africa, Rwanda, Uganda, Nigeria, and Tanzania are already at various stages of implementation.

Kenya’s payments sector has long been fragmented, with limited interoperability.

Safaricom’s M-Pesa, holding a dominant 90% market share in mobile money, operates as a standalone platform.

Meanwhile, banks run their own switch, Pesalink.

Now, as Kenya prepares to implement a national payments infrastructure, banks are advocating for an upgrade of Pesalink instead of building a new, independent system.

However, this proposal falls short of ensuring neutrality and inclusivity.

Pesalink is bank-owned, excluding other Central Bank-licensed financial players such as fintechs.

Even if expanded to include all licensees, it would still function as a mutual entity—failing to deliver the impartiality needed for a true national payments system.

A Central Bank-led national payment system with open API access would be a game-changer. It would create a level playing field for banks, telcos and fintechs alike, while fostering innovation.

Such a system would allow fintech entrepreneurs to bring new financial products to market without reliance on entrenched intermediaries.

Change is coming—but resistance is inevitable.

Banks naturally prefer to maintain control by integrating the national switch within the Pesalink framework.

As new financial service models emerge, the winners will be those who embrace change, innovate quickly, and adapt to the evolving landscape.

This is not just a shift in infrastructure—it’s a defining leadership moment for Kenya’s financial ecosystem.

Credits: George .