The Central Bank of Kenya (CBK) is drafting a national instant payment switch to lower transaction fees and enhance interoperability among banks, mobile money services, and other payment platforms. This initiative is part of the Draft National Payment System Policy released in August 2026. The policy identifies high transaction fees and fragmented platforms as significant challenges for consumers and businesses in Kenya.
The proposed national instant payment switch will enable instant, real-time payments across the country, allowing seamless transactions between different payment platforms. This system will utilize common technical standards and infrastructure, facilitating communication among disparate payment systems and addressing existing gaps in the ecosystem. The CBK, in collaboration with the Treasury, aims to improve the efficiency of payment systems in Kenya.
The draft policy also emphasizes the adoption of open API standards, which will enable financial institutions and payment providers to connect their systems and process cross-platform transactions. Furthermore, banks, payment service providers, and system operators will be required to adopt national or global messaging standards to enhance the exchange of transaction information. This move is expected to promote interoperability and reduce transaction costs.
To encourage the adoption of the national instant payment switch, the Treasury and CBK plan to offer incentives to institutions that achieve seamless interoperability. Regular compliance audits will be conducted to enforce technical and operational standards. The proposed switch is expected to promote competition among payment service providers, potentially leading to reduced transaction fees.
The draft policy does not prescribe specific fee caps, implying that any reduction in transfer charges will depend on how providers price their services after the switch is implemented. The CBK and Treasury aim to create a more efficient and competitive payment landscape in Kenya. The proposed national instant payment switch is a significant step towards achieving this goal.
Additional proposals in the draft policy include amendments to payment laws, a testing framework for new payment technologies, and expanded access for non-bank entities to key payment systems. These initiatives are expected to promote innovation and inclusion in the Kenyan payment sector. The draft policy is open for public comment, and stakeholders are encouraged to provide feedback.
The implementation of the national instant payment switch is expected to have a positive impact on Kenya's economy, promoting financial inclusion and reducing transaction costs for consumers and businesses. The CBK and Treasury are working together to ensure a smooth implementation process. The proposed switch is a significant development in Kenya's payment sector, and its success will be closely watched by stakeholders.
Key points
- The proposed national instant payment switch aims to reduce transaction fees and improve interoperability among banks, mobile money services, and other payment platforms in Kenya.
- The draft policy emphasizes the adoption of open API standards and national or global messaging standards to enhance the exchange of transaction information.
- The Treasury and CBK plan to offer incentives to institutions that achieve seamless interoperability and conduct regular compliance audits to enforce technical and operational standards.
