Overview
A payments System refers to a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system. According to the Bank of International Settlements (BIS), a payment system “consists of a set of instruments, banking procedures and, typically, interbank funds transfer systems that ensure the circulation of money.” They are a major channel by which shocks can be transmitted across domestic and international financial systems and markets.
Directory of authorized Payment
Service Providers (PSPs)
National Payments System are the conduits through which buyers and sellers of financial products and services make transactions and are an important component of a country’s financial system. In Kenya participants comprise of the Central Bank of Kenya, the Government, Commercial Banks, Financial Institutions and Payment System Providers. National Payments Systems in Kenya are classified into two categories; Large Value (Wholesale) and Low Value (Retail) Payment Systems. The classification is based on the throughput in terms of values and volumes processed.
Large Value Payment Systems
Transactions are cleared and settled on a continuous basis.
Regional Payment Systems
Operate within the East African Community (EAC) and Common Market for East and South Africa (COMESA) regions.
Retail/Low Value Payment Systems
Payments cards and mobile money transfers, facilitate e-commerce and robust commercial activities within an economy.
Mobile Phone Money Transfer Services
Provision of Electronic Retail Transfers, Small Money Issuer, E Money Issuer & Designation of Payment Instrument.
View updated series of banknotes.
Large Value Payment Systems
Kenya Electronic Payment and Settlement System (KEPSS)
KEPSS is classified as a Systemically Important Payment Systems (SIPS) due to the value of transactions it processes and its impact in the economy. The system was implemented on July 29, 2005 and is wholly owned and managed by the Central Bank of Kenya (CBK).
An RTGS system is defined as a gross settlement system in which both processing and final settlement of funds transfer instructions take place continuously (i.e. in real time) from one bank to another. The transactions are settled individually, continuously and in real time in the accounts of the participants in the Central Bank provided that the sending participant has sufficient covering balance or credit (settlement limit). RTGS systems mitigate systemic settlement risk inherent in large value net settlements.
KEPSS implementation facilitated the mitigation of risks associated with the previous paper-based inter-bank settlement system, transformed the management of liquidity in the banking industry, reduced the systemic importance of the Automated Clearing House (ACH) and enhanced financial stability while providing an efficient mechanism for monetary policy transmission. KEPSS has continued to register remarkable growth in both volume and value of transactions.
- Real time funds transfer
- Risk control mechanism
- Finality of funds settlement
- Simple payments process
- Allows large value transfers between banks
- Permits on-line real time query of the funds position
- Enables fund movement between cities
Regional Payment Systems
The need to enhance efficiency in payment systems within the East African Community (EAC) and Common Market for East and South Africa (COMESA) regions – and therefore promote regional trade and economic integration – resulted in the development of two regional payment systems. The East African Payment System (EAPS) and the Regional Payment and Settlement System (REPSS) objectives are to facilitate cross border payment and settlement within the EAC and COMESA regions, respectively. Both are integrated in KEPSS.
East African Payment System (EAPS)
EAPS is a funds transfer mechanism used to transfer money from one bank to another across the border within the East African Community countries of Kenya, Rwanda, Tanzania and Uganda. Transactions are carried out in the EAC local currencies. EAPS services are offered to bank customers (public) through RTGS between 8:30am to 4:00pm EAT (East African Time) on weekdays (Monday to Friday), excluding public holidays.
Regional Payment and Settlement System (REPSS)
REPSS is a system designed for effecting cross border payments between countries in the Common Market for Eastern and Southern Africa (COMESA) region. The system allows banks in member countries to transfer funds more easily within COMESA region through their local RTGS in USD and Euro. In Kenya the REPSS services are available to the public in most commercial banks from 8.30am to 2:00pm. The system went live in October 2012 and currently it is available in 8 countries, namely Mauritius, DR Congo, Malawi, Swaziland, Uganda, Zambia, Rwanda and Kenya.
