Over the last few years, Kenya has experienced continued growth in GDP and witnessed a solid influx of public and private investment. The country’s financial sector is vibrant and ever-evolving, with innovations at the forefront of financial institutions’ priorities.
One of the catalysts for this growth is the continuous development of a robust and inclusive digital payment ecosystem, with particular emphasis on payment interoperability. In 2021, with the help of banking technology solutions provider Tietoevry Banking, Kenya became one of the first countries in Africa to start running an ISO 20022 instant payment system based on modern microservices technology. This allowed Kenya’s financial institutions to create an efficient, scalable, and secure instant payment system.
In January 2025, Kenya’s financial sector achieved another major milestone. Safaricom and the Kenya Bankers Association (KBA) submitted a proposal to the Central Bank of Kenya to connect M-Pesa with Pesalink. After years of struggling with payment interoperability in Kenya, this integration has the potential to significantly impact Kenya’s financial landscape by advancing financial access and streamlining digital payments.
The decision has not yet been made, and the Central Bank of Kenya (CBK) is evaluating various offers and the winning technical partner will define how the implementation will be executed and where and how money flows, which has major economic implications for the country. This is a decision that must be weighed carefully. One thing is certain- a flexible, modular, and cross-sectoral instant payments system will only strengthen Kenya’s financial ecosystem.
The Case of Interoperability in India and the Maldives
To ground these talks, let’s explore how national payment interoperability has been achieved in India and the Maldives.
Indian Unified Payments Interface (UPI) is a payment system that revolutionized digital transactions in the country. The UPI introduced a real-time, peer-to-peer (P2P) payment system, enabling seamless transactions across banks and platforms, simplifying payments for individuals and businesses.
Today, UPI powers over 75% of India’s retail digital transactions, and its interoperability has democratized payments nationwide. In 2023, UPI processed a staggering 117 billion transactions worth a combined US $2.19 trillion. The widespread adoption of UPI has significantly boosted economic activity in India by reducing transaction costs and enabling frictionless payments, stimulating consumer spending and business growth.
Additionally, UPI use has led to substantial payment digitalization in India, including decreased cash usage and effectively bridging the financial access gap for many previously unbanked individuals.
The Maldives have witnessed a similar payment revolution. The Maldives Monetary Authority (MMA) played a pivotal role in introducing instant payment systems that have transformed the country’s financial landscape, making it genuinely interoperable. In August 2023, the MMA, in collaboration with Tietoevry Banking, launched the Maldives Instant Payment System, Favara.
Favara is a centralized system uniting the country’s banks and ensuring interoperability among them. As a result, individuals and businesses can transfer funds instantaneously, 24 hours a day and seven days a week, anywhere in the country. Plus, one doesn’t have to be a Maldives resident to benefit from Favara, as foreigners can create e-wallets to integrate into the country’s payment system.
As demonstrated by UPI and Favara, interoperability drives economic growth by transforming payment systems and empowering individuals and businesses.
Kenya’s Unique Payments Landscape – An Opportunity for Quick and Efficient Integration
Kenya is in a unique position, and therefore, no other country’s experience can serve as a direct blueprint. It presents its own challenges, but also unique strengths that can be turned into competitive advantages.
Kenya’s payment landscape is well-known for its saturation. And while the abundance of banks, fintech services, and mobile payment operators ensures ever-evolving dynamics within the industry, it also poses a significant interoperability challenge. The fragmentation creates barriers to transactions across platforms and imposes high transaction costs on businesses and consumers.
However, Kenya does have one example of successful integration- PesaLink, the account-to-account payments solution. Launched in 2015 and now connected to 41 banks, PesaLink stands out as a robust local platform backed by strong IT capabilities, and solid infrastructure, already driving transactions worth billions of shillings, including both merchant and government payments. With commercial bank backing and extensive integration in account-to-account payments, it already takes care of one half of the transaction environment- non-bank transactions, aka, mobile money, through its integration with M-Pesa. By reducing the gap between banking systems and mobile wallets, PesaLink has already made it easier for millions of Kenyans to enable smoother and faster transactions.
With existing infrastructure already in place, the fastest, most efficient, and most cost-effective route to setting up a national switch would be to use the foundation that Pesalink has already built. Kenya already has everything it needs locally, and there is no need to look for external, offshore services.
This is also an opportunity to further strengthen Kenyan initiatives and innovations. By setting up a modular structure on top of Pesalink’s existing infrastructure, the sky’s the limit.
Of course, every course of action comes with uncertainty. Regardless of how Kenya’s Fast Payments System provider is chosen, there are still discussions that need to be held.
What will be the format? Who will be responsible? Who will be allowed to integrate? How will this integrate with other countries’ national switches? How will we develop regionally? How will anti-money laundering (AML) and Know Your Customer (KYC) requirements be upheld, and who will be responsible for them?
These questions not only need to be answered, but doing so could also help clarify which partner is best suited for the nation.
Kenya’s Financial Future
Kenya’s economic prosperity hinges on the success of its payment systems. By fostering collaboration, removing barriers, and embracing technological advancements, the country can create a financial ecosystem that empowers individuals and businesses alike. And the good news is, it already has everything it needs to thrive.
By investing in technology and standards, banks can create a seamless financial interface, enhancing customer experience, driving innovation, and boosting the economy. Additionally, joining forces with M-Pesa holds plenty of potential to result in growth and innovation in the banking sector and beyond.
A more developed banking industry would provide Kenyans with increased access to credit, enhanced financial inclusion, improved financial literacy, and more convenient and efficient use of financial services provided by banks, ultimately leading to greater economic prosperity and improved quality of life.
Edgars Bīberis is the Regional Director of Sales and Business Development at Tietoevry Banking- Middle East & Africa
