KBA launches Interbank Switch to Contend with M-Pesa Dominance

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Safaricom’s M-Pesa platform has dominated the mobile money industry for several years nowbut this status may be under threat. This is after the unveiling of Integrated Payment Services Limited (IPSL) by the Kenya Bankers Association (KBA). IPSL is KBA’s subsidiary company that is expected to compete with M-Pesa, Orange Money and Airtel Money.

IPSL is a technology-driven payments delivery service firm whose goal is to increase the interoperability and efficiency of the banking sector through its reasonably priced solutions. This company hopes to provide a platform through which direct money transfers between banks can be completed successfully without using M-Pesa services.

Speaking during the launch of IPSL, Habil Olaka, the CEO of KBA, stated that IPSL will work towards reinforcing a digital payment solution for the Kenyan market.  The new service was developed as a solution to a gap that has existed in the payment system between banks and it will support person-to- person (P2P) transfer of funds where a customer holding an account with bank “A” can transfer funds to another person’s account in bank “B” in real time.

IPSL has been registered as a subsidiary of KBA on behalf of the 43 Kenyan banks. At the moment, the firm is testing its own P2P payment solution with at least 20 banks participating in the User Acceptance Testing (UAT) trials. Once successfully completed, IPSL is set to ensure a secure, reliable and cost effective platform for money transfers at that level.

In addition to the above roles, IPSL will be tasked with receiving new bank or branch registrations, monitor banks connectivity, act as a mediator in case of disputes, registering users for P2P services, ensure customer connection with banks, and authorize routing switch for P2P transactions.

The money transfers supported by this platform will be from five main bank channels namely Mobile banking, Internet banking, Automated Teller Machine (ATM), front office, Agency Banking and POS.

The reliance on mobile operators, especially M-Pesa, for mobile payment solutions is under threat since the joint technology by Kenyan banks promises to provide an efficient, secure and cost effective solution.

 

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