Kenyan Banking Industry Unviels Mobile Platform

[Dr. Job]

Banks unveil own mobile money platform allowing transfer of up to Sh1m

Kenya Bankers Association (KBA) chief executive officer Habil Olaka. Kenyan banks Thursday morning launched a mobile money platform that will allow customers to transfer up to about Sh1 million in a single transaction. FILE PHOTO | DIANA NGILA

By MUTHOKI MUMO

Posted Thursday, February 16 2017 at 11:49

In Summary

• So far, the system has only been enabled for person-to-person transfers.
• Customers will be able to move money between accounts on the PesaLink system in real-time.
• The banks offering PesaLink services are Standard Chartered, Co-Operative Bank, Barclays Bank, Guardian Bank, Victoria Commercial Bank, Credit Bank, Prime Bank and Middle East Bank.
• Transaction fees will vary depending on the bank that customers use to access the PesaLink service.

Kenyan banks Thursday morning launched a mobile money platform that will allow customers to transfer up to about Sh1 million in a single transaction.

PesaLink is jointly owned and operated by banks through Integrated Payment Services Limited (IPSL), a subsidiary of the Kenya Bankers’ Association (KBA).

“The system will enable users to transact as low as Sh10 and as much as Sh999,999 across the banking system,” said KBA chief executive Mr Habil Olaka.

So far, the system has only been enabled for person-to-person transfers. Customers will be able to move money between accounts on the PesaLink system in real-time.

REAL: Banks get CBK backing to launch own mobile cash transfer system

This is widely seen as the industry’s answer to M-Pesa’s dominance given that transactions carried out via PesaLink will bypass traditional telecom operators.

In addition to mobile money platforms, PesaLink will also be accessible to customers via ATMs, internet banking platforms as well as bank branches and agencies.

12 banks

Twelve banks are offering the PesaLink service to customers and so far it has been enabled for person-to-person transfers.

READ: CBK sees cyber risks as banks move to own mobile money platform

The banks offering PesaLink services are Standard Chartered, Co-Operative Bank, Barclays Bank, Guardian Bank, Victoria Commercial Bank, Credit Bank, Prime Bank and Middle East Bank.

IPSL says that it expects 27 more banks to come on board within a month.

Transaction fees will vary depending on the bank that customers use to access the PesaLink service.

However, there is a proposal to waive fees for all transactions up to Sh500.

mumumo@ke.nationmedia.com

Banks unveil own mobile money platform allowing transfer of up to Sh1m

 

[Dr. Job]

Banks take on M-Pesa as they roll out money transfer platform in March

Customers queue at an M-Pesa shop in Nairobi. /FILE

Bankers on Thursday unveiled mobile cash transfer system after nearly five years of strategising.

The platform dubbed PesaLink will enable bank customers to move between Sh10 and Sh999,999 from one account to another.

The platform, which will transfer cash between mobile and internet banking channels, ATM and branch, will be operationalised in the next one month.

The transfers will be done real-time, without going through intermediaries, including mobile money transfer platforms like M-Pesa, Airtel Money and Orange money.

"PesaLink has been developed as a complimentary tool to existing mobile money transfer and related wallets," KBA chief executive Habil Olaka said during the launch.

"As complimentary tool, it is not out to compete with any existing mobile money wallet or transfer product," he added.

But mobile money platforms will lose the transaction fees they earn from mobile banking transfers once the KBA platform goes live.

The payment switch is being run by KBA's digital innovations subsidiary, the Integrated Payment Services Ltd.


The Central Bank has approved 12 out of 42 banks to roll out the PesaLink product.

They are Standard Chartered, Co-operative, Barclays, Diamond Trust, I&M, and Gulf African Bank.

Others are Middle East Bank, Victoria Commercial Bank, Guardian Bank, Credit Bank and Prime Bank.

IPSL chief executive Jennifer Theuri said the rest of the banks are at different stages of getting CBK's approvals.

IPSL said it was looking at charging Sh11 per transaction, with individual banks setting their own fees after regulatory approval.

Transfers of up to Sh500 will be free, in a strategy geared towards attracting the masses to the platform, she said.

"We are confident that we are creating value for the banking industry as PesaLink will provide a safe, secure and cost-efficient platform for Person-to Person money transfer," Theuri said.

Banks take on M-Pesa as they roll out money transfer platform in March

 

[Dr. Job]

It seems the banks have been trying to kill this M-pesa thing for a while and now they have their way..

Authors reveal how banks fought hard to kill M-Pesa

DOMINANT: A client is attended to at an M-Pesa outlet along Baluchi Street in Mombasa.

Kenyan banks fought tooth and nail to have M-Pesa shut down one year after its launch as its popularity was spreading like bushfire and posed a threat to their operations, a new book launched last evening reveals.

The book titled 'Money, Real Quick: Kenya's Disruptive Mobile Money Innovation" says that the Central Bank was forced to hire an IT consultant one year after the launch of M-Peesa to conduct an operational risk audit before allowing the mobile money transfer platform to continue operating.

This followed an order by the the Finance minister, the late John Michuki after complaints from an informal cartel of local banks unhappy with the threat posed by M-Pesa to their business.

The book says CBK hired UK and US based Consult Hyperion to conduct a thorough audit on M-Pesa which had been launched in April 2007 with just 54, 000 customers but spread as a wild fire causing panic in the banking industry.

It currently has more than 10 million customers which is more than the combined customer base of all the local banks. Bankers felt that M-Pesa was not properly regulated thus had an unfair competitive advantage which was putting the entire financial system at risk.

The banks argued that the mobile money service was free to skirt onerous 'know you customer' regulations which made it easier to sign up subscribers with marginal background checks.

"Cash merchants weren't even employees of Safaricom and were total wildcards," says the book in a section highlighting the banker's perspective.


Banks also felt that they were absorbing costs to help M-Pesa run smoothly since they were supposed to meet the demands of agents flush with e-float as more money flowed from urban areas to rural areas.

Bankers are said to have questioned why Safaricom was allowed to have agents while banks could not use them. At that time, agent banking regulations had not been effected but they have since come into place.

"The bankers essentially accused the Central Bank of operating with a double standard of giving Safaricom a free ride to undercut their long established business," reads the book in part.

There was also a perception that M-Pesa customers' money might fall victim to money laundering and pyramid schemes as well as potential fraud by agents.

The Kenya Bankers Association representing 43 banks claimed that Safaricom had no mechanism to compensate customer in case of loss. "Bankers created the impression that M-Pesa was a disaster waiting to happen.

It was a gamble with people's money and the government was not being proactive in protecting the public interest," it adds. But the CBK audit cleared M-Pesa to operate after assurance that all its systems allowed for comprehensive reporting and management so every transaction could be monitored individually and enmasse. Another FinAccess survey had shown that 80 per cent of M-Pesa users were satisfied with the service.

Authors reveal how banks fought hard to kill M-Pesa

 

[Edward Wanjala]

Lol, they really want to Kill M-Pesa

 

[Kafrican]

Ok, its not exactly like mpesa but it uses same concept except from my understanding, it works with people who already have bank accounts, they can tranceact directly like with mpesa, from one bank accout to another and this tranaction is in realtime, no waiting time...... It would be an Mpesa disrupter if they allow the system to also be able to send money to mpesa virtual accounts thus leverage on mpesa agents for people to be able to eadily withdraw small amounts of cash ---- thats my two cents...




Kenya’s new digital payments platform PesaLink, that will enable consumers to make real-time mobile person-to-person (P2P) payments from US$0.10 up to US$9,650 at any time without having to go through intermediaries, is “expected to cut the cost of transactions and transform the way consumers interact with their banks”, the
Kenya Bankers Association (KBA) says.
The service has been launched by KBA, the country’s banking umbrella organisation, with support from the Central Bank of Kenya (CBK), and will be managed by Integrated Payment Services Limited (IPSL), a fully-owned subsidiary of KBA.
PesaLink will be offered “through a phased implementation, set to begin with 12 banks that have completed a pilot exercise and received product approvals”, IPSL says.
“Through KBA, banks have invested to develop PesaLink, which signals the banks’ view of the role they see digital and mobile technology playing in the national payment system. The product has been in the making since 2013.”
‘Duty to serve’
“The system will enable users to transact as low as KES 10 ($0.10) to as much as KES 999,999 ($9,650) across the banking system,” says KBA CEO Habil Olaka. “In effect, it will facilitate both large transactions, as well as such micropayments that millions of Kenyans settle in cash every day.”
“What PesaLink demonstrates is that KBA and the member banks are aware of their duty to serve customers, innovate and create value for our economy,” says KBA vice chairman John Gachora. “PesaLink is proof that the banking industry has embraced the technology revolution sweeping across the payments industry.”
The 12 banks set to begin implementation of PesaLink are Standard Chartered Bank, Co-Operative Bank, Barclays Bank, Commercial Bank of Africa (CBA), I & M Bank, Diamond Trust Bank, Gulf African Bank, Guardian Bank, Victoria Commercial Bank, Credit Bank, Prime Bank and Middle East Bank.
“As the first set of banks roll out the product to their customers, the rest of the banks are in various stages of testing the system,” IPSL adds.
“Currently, the platform offers P2P bank transfers — in the second phase of the PesaLink roll out, KBA will be looking to enter into merchant payments as well as paying utility bills,
Kenyan banks roll out PesaLink real-time direct P2P mobile payments • NFC World

 

[Kafrican]

Nearly ten years after its launch, M-Pesa finally has what could be a major competitor in the multi-billion dollar mobile money transactions business.
Kenyan banks, who petitioned regulators to prevent M-Pesa’s launch in 2007, have now launched PesaLink, a mobile and electronic money transaction service.
After regulators quashed banks’
concerns and gave M-Pesa a chance in Mar. 2007, banks were amongst the first players to strike partnerships with the service after its run-away success from the onset. At least 40 banks used it to grow their deposits, issue out loans and facilitate bills payments serving over 3.1 million customers every month. In 2012, the banks estimated they were losing up to $22 million annually in commissions to mobile money providers such as M-Pesa and Airtel.
While M-Pesa limits daily money transfer amounts to 140,000 Kenya shillings ($1,400), banks have set the limit at up to $10,000 meaning they are likely to attract a larger constituency of high value transfers. PesaLink transactions can also be initiated from the mobile phone, the banks’ branch, at the ATM, at agency banking outlets or via the Internet.
“The banks can deliver scale because as a customer, you get to keep your bank account and still transact with people having accounts in other banks in real time,” says Eric Musau, an analyst at Nairobi-based Standard Investment Bank.
“It is certainly a much stronger proposition and competitor to M-Pesa.”
Kenyan Bankers Association chief executive Habil Olaka sees PesaLink as a “complementary tool” to existing financial products including mobile money.
Users can transact up to $5 free of charge unlike M-Pesa’s feeless limit of $1. They also don’t have to rely on M-Pesa or other mobile money services and can simply transfer money from one bank account to another in real time using the banking sector platform.
George Bodo, head of banking research at Ecobank says the costs and waiting period associated with transacting large value transactions of say, $10,000 will decline significantly. The previous process involved drawing of cheques or making electronic funds transfers, which are lengthy and costly.
“This is just an enhancement in the retail payments space. It is what the banks should have done a while back,” he tells Quartz.
But, a crucial competitor advantage with M-Pesa is its ubiquity and the ease with which it has helped millions of people access financial services. In the past many of these people were locked out because the cost of owning a bank account was way too high for them.
“Like most products that go on to dominate their respective sectors, Safaricom’s M-Pesa is synonymous for mobile money transfer and for this reason we think it will be difficult for the banks to significantly disrupt this relationship,” analysts at Exotix Partners
observe (pdf).
Currently, M-Pesa controls 85% of person-to-person money transfer valued at over $7 billion in the first half of 2016. In second place is Equitel, a mobile money service operated by Equity Bank, at 15% with $1.1 billion in transfers in the same period.
Kenyan banks have joined forces to launch a mobile money rival to M-Pesa