KENYAN SACCOS Push For Access to National Payments System to Offer Remittance Services.
Saving and Credit Cooperative Societies (saccos) in Kenya are seeking access to the National Payments System (NPS) to enable them to offer international remittance services to their members.
Currently, only banks, the Central Bank of Kenya, the government, and licensed payment service providers like mobile money operators can participate in the NPS.
The lack of direct access is preventing 67% of surveyed saccos from entering the remittance market, forcing some to rely on intermediaries while most don't offer those services at all.
The saccos, through their regulator the Saccos and Societies Regulatory Authority (Sasra), are advocating for the Central Bank of Kenya to integrate them into the NPS.
Enabling direct access would allow saccos to retain and expand membership, mobilize more deposits, and meet member needs for international money transfers, which are mainly used for asset financing, loans and savings by the Kenyan diaspora.
However, legislative amendments to the Central Bank Act, National Payment System Act, and Money Remittance Regulations would be required to recognize saccos as financial institutions permitted to deal in foreign exchange and remittances.
The Central Bank of Kenya (CBK) is progressing towards a financial sector-wide interoperability solution, enabling instant payment transfers across the industry.
This initiative includes forming a CBK-Industry Technical Working Group to design and implement the solution, known as the Fast-Payment System (FPS).
The FPS will integrate payment services from various financial institutions, allowing customers to send and receive money instantly, regardless of their institution.
This development aligns with the Central Bank of Kenya Act, promoting efficient payment systems in line with global best practices.
Discussions on enhancing payment system interoperability began in 2014, with significant progress made in person-to-person and merchant interoperability.
However, challenges remain due to the lack of a centralized switching mechanism and reliance on costly bilateral arrangements.
The CBK aims to address these issues, laying the foundation for an open and fully interoperable Digital Public Infrastructure.
The successful launch of FPS will position Kenya among the 57 countries with operational systems, supporting the National Payments Strategy 2022-2025.