Kenya too goes for real-time payment

The system, which the Central Bank says is well tested and fraud-proof, has been designed in a way that its operations will not be limited to transactions valued at over Ksh1 million alone. Mr Wanyela says it will also execute small transactions from as little at Ksh1.

According to Prof Ndung’u, the Bank’s cardinal goal is to have more than 80 per cent of all the high value transactions covered by RTGS.

“We are much lower than the target but this new payment system will radically move us towards our goal,” he said.

CBK’s Monthly Economic Review report shows that Kepss moved a volume of 21,977 transaction messages worth Ksh1,032 billion in June 2009 compared with a volume of 24,024 transaction messages valued at Ksh1,064 billion moved in May 2009, representing 3.1 per cent decrease in value and 8.5 per cent decrease in volume.

However, the flows are expected to rise with the implementation of value capping.

“During the 12 month period to June 30, 2009, the value moved averaged Ksh55.67 million per transaction while the average value moved per day was approximately Ksh62.14 billion. Direct settlements through Kepss in June 2009 averaged 92.2 per cent of the total settlements, while indirect payments averaged 7.8 per cent,” Prof Ndung’u said.

This is not the first time the bank’s regulator is engaging in modernising its payments structure.

In 2008, CBK in conjunction with KBA initiated ambitious modernisation programmes “which are ongoing and are expected to be realised this year.”

They include cheque truncation that is projected to come into effect from mid next year, failure to settle mechanism, and the GPay project.

Mr Mwaura says all of these projects are aimed at mitigating various risks and enhance the efficiency and effectiveness of the country’s payments system. All of these, he says, will be in harmony with EAC payment systems principles.

“ACH therefore still remains a systemically important payment system as opposed to being a low risk retail payment system. It is in this context that it has been seen necessary to introduce value capping in order to reduce risk of settlement,” Mr Mwaura said.

This system will be used stopping the processing of high value payments using cheques and electronic funds transfers (EFTs) of Kenya shillings one million and above through the Nairobi automated clearing house.