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Kenya

CBK now focuses on e payments

NAIROBI, Kenya Feb 4- The Central Bank of Kenya (CBK) has introduced draft regulations for electronic payments as financial innovation in the market develops rapidly.

According to CBK Governor Prof Njuguna Ndung’u the rules seek to improve regulation and supervision of efficient, effective payment, clearing and settlement system.

The regulations will cover electronic retail transfers and electronic money issues.

Prof Ndung’u said on Thursday that as financial institutions as well as mobile operators leverage on technology to transfer and move money, stringent polices guarantee the efficiency and security of money transfer.

“The mobile phone money transfer technology has in a few years of its existence demonstrated how financial services can be provided to a large number with least cost using appropriate technological platforms. This is how our financial inclusion efforts have borne some fruits,” Prof Ndung’u said.

The new regulations also set up guidelines for the authorisation of Payment Service Providers (PSPs) that do not fall in the financial services sector.

“We continue to receive overwhelming request by people to start a money transfer service and the regulations help us have parameters within which they operate,” he said.

However, such institutions will have to adhere to high standards of scrutiny, as its directors must be clearly identified as well as the shareholding structure.

They will also be expected to have a core capital of not less than Sh10 million. The core capital has been defined clearly to avoid a situation where a provider arbitrarily uses such maneuvers as goodwill to ensure meeting requirements without having tangible capital.

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E-money issuers who include money transfers and plastic cards as well as online payments, are now supposed to disclose certain information in writing to new e-money account holders such as information that deposited funds cannot earn interest and a disclaimer that it is not a savings account or other investment instrument.

As funds under the scheme are not under the Deposit Protection Fund, it is expected that the issuers will set low limits as to how much one can handle.

Kenya has become a case study over the years since the introduction of mobile money transfer.

“This has created many opportunities for Kenyans and including employment, access to financial services and an effective tool for channeling currency to the banking systems,” Prof Ndung’u said.

Since the introduction of the service in 2007 with Safaricom’s M-PESA, total transactions have reached Sh2.45 billion a day.

With all four operators having unveiled similar platforms, 15.4 million customers have so far picked it up with 39,000 agents spread countrywide.
 
CBK is currently working with the government to develop the National Payments System Bill, which will enhance further the regulation and supervision of payment systems and payment service providers.

“These regulations are therefore meant for use by the industry and to streamline activities while the National Payments System Bill will come in to reinforce them,” he said.

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