Kenya Interbank Transaction Switch, is a mobile money transfer platform that has been developed by the Kenya Bankers Association (KBA) to compete with Safaricom’s MPesa mobile money transfer service.
Six banks, of the 43 members of the Kenya Bankers Association (KBA), have received regulatory approval from Central Bank of Kenya (CBK) to launch a mobile money transfer platform. This platform is to run on the Kenya Inter-participant Transaction Switch (KITS).
The Kenya Bankers Association (KBA) chief executive Habil Olaka, said “At the moment, about six banks have received approvals to launch the product. Approvals started coming in around two weeks ago. We started operating the system on a pilot basis towards the end of last year and will now move to incorporate the approved banks and their customers as and when they receive the go-ahead. Once a bank gets approved, they immediately start on-boarding customers onto the system”
Standard Chartered, Commercial Bank of Africa, Barclays Bank, Equity Bank are among the lenders that have received CBK authorisation to pilot the Kenya Interbank Transaction Switch.
Kenya Bankers Association real-time, 24-hour, Integrated Payments Service Limited (IPSL), promises to reduce cheque transaction that normally take at least two working days to clear. This will also increase competitive weight on mobile money products such as MPesa, Airtel and Orange Money.
Customers transacting Kshs 500 and below using the new platform will not incur any fees. It will be comparatively cheaper to transact on the new platform as compared to the current systems.
A Kshs 2,700 transaction will cost you Kshs 20 as compared to the Kshs 55 charge you would normally pay using Safaricom’s Mpesa.
During the transaction process the receiver of money transferred through the new platform will get a code from the sender on their mobile device and use it to make payments to a bank account or withdraw the cash from banking agents. This also ensures, customers without bank accounts can still benefit from the service.
“The new system will enable customers make one direct transfer between accounts without having to go through several systems such as mobile money wallets, which charge you at every stage.” said KBA CEO Habil Olaka.
The Kenya Inter-participant Transaction Switch (KITS) was founded in 2012 by KBA. Its main objective was to address the challenge of creating a more integrated and inter-operable retail payments platform. To implement the interoperability strategy, KBA formed Integrated Payments Service Limited (IPSL) as a subsidiary company to manage the commercial aspects and running of the system.
KITS is meant to facilitate real-time money transfer between banks without going through mobile money products like, MPesa, Airtel Money and Orange Money. Additionally, it would also shorten the clearance time for cheques which currently take two working days to clear.
“Customers will be able to push money between different accounts and the funds will reflect within 45 seconds. These are some of the system’s efficiencies.” said KBA CEO Habil Olaka.
KITS also want to increase the hours for payments made through real-time gross settlement (RTGS) systems which currently process payments between 0800hrs and 1500hrs on weekdays. The problem with RTGS is that it takes four hours or more to reflect on the recipients account. The switch will offer real-time payments.
The Kenya Interbank Transaction switch is to launch in the next two months. To try the service, visit your bank and signup for the service. Financial intermediary products and solutions developed by IPSL will be delivered under the applicable regulatory provisions and regulated by the Central Bank of Kenya.
“We expect to launch the platform in about eight weeks, or even less, depending on how comfortable we shall be at the time. We do not need to get all 43 banks on board in order to go live; we simply need a critical mass of customers.”said KBA CEO, Habil Olaka.
When complete, the IPSL system, will offer a safe, secure and cost efficient platform for person-to-person (P2P) money transfer through Mobile banking (USSD & Application), Internet banking, ATM, Branch front office, Agency Banking and POS.