In Summary
- The Payment Association of Kenya will allow for harmonisation of interchange charges across varied financial service providers.
- “The regulations became law in August last year, brought into play because mobile money had no rules governing them yet there was need to create order in the sector,” said CBK head, national payment system Stephen Mwaura Nduati.
- The changes come into play after a surcharge fight that has seen Equitel money transfer charges flare up following Safaricom’s increment of bank to mobile charges.
Central Bank of Kenya has waded into the tag of war between banks and mobile money transfer platforms with a proposal to harmonise transaction charges.
Through the payment act 2011, the regulator is setting up a payment services management board (The Payments Association of Kenya) that will draw in telcos, switches, aggregators, electronic-money issuers, banks and other financial service providers in Kenya.
According to the head of future financial systems at Financial Services Deepening (FSD) Victor Malu, the platform will bring, ‘Equity bank and M-Pesa to the same table to talk about payments, inter-operability, eventually lowering the cost of transactions.’
Mr Malu spoke on the sidelines of the Africa Information and Communications Technology Exhibition and Conference (AITEC) Banking & Mobile Money in Nairobi Tuesday.
NO RULES
“The regulations became law in August last year, brought into play because mobile money had no rules governing them yet there was need to create order in the sector,” said CBK head, national payment system Stephen Mwaura Nduati.
The Payment Association of Kenya will allow for harmonisation of interchange charges across varied financial service providers. The operators will share infrastructure, rules of engagement with each other and settlement of payments.
FSD is operationalising the regulations and borrowing from the experience of South Africa, UK and Australia who already have such institutions operating.
“Central bank will empower members of the association to self-regulate each other. The body is under formation, when institutionalised, it will create regulations that will manage interchange charges,” said Kenya Bankers Association CEO Mr Habil Olaka.
The changes come into play after a surcharge fight that has seen Equitel money transfer charges flare up following Safaricom’s increment of bank to mobile charges.
The changes that are currently being reviewed have prompted Equity Bank to demand an explanation from Safaricom. Equity Bank CEO James Mwangi said that the charges that affected Equity transactions through Equitel to M-pesa were effected on August 1.
