Business

Pesalink seeks larger share of digital payments

Integrated Payments Services CEO Agnes Gathaiya.

Over the past decade, Kenyan commercial banks bet on mobile network operators to effect mobile money transfer and digital payments - usurping sizable market share in the financial sector.

After years of negotiations and false starts, the Kenya Bankers Association in 2016 launched Pesalink through a subsidiary Integrated Payments Services Ltd (IPSL).

The Financial Standard had a chat with the new IPSL Chief Executive Agnes Gathaiya on the progress made so far and the strategy bankers have of reclaiming lost opportunity in digital payments.

How many banks have been plugged into the Pesalink? What is the volume of transactions?

We now have 30 banks on the system and six more whose applications are pending at the Central Bank of Kenya. These banks represent 99 per cent of the active bank accounts in Kenya so we are assured that any banked Kenyan who wishes to conduct a Pesalink transaction today can do so.

Today, we have moved Sh87 billion through the switch. The number of transactions continues to grow and on average, we have 100,000 transactions in a month. Once we start driving our awareness campaign, we plan to grow transaction volumes ten-fold in the next six months.

Where do you see the new opportunity for growing adoption and transaction?

We are working on partnerships with organisations and these will soon go live and help us move traffic and get us closer to our target. One of them is eCitizen and people can now pay for Government services directly from their bank accounts. Such large ticket items were previously limited by the caps on the amount of money users can send through mobile money.

Now, it is possible for transactions that go up to Sh1 million through Pesalink. A number of SMEs today have also adopted Pesalink for payments and most of these are in the retail and distribution sectors such as hardware stores.

Merchants and retail owners appreciate the fact that moving their money through Pesalink saves them transaction costs they would have incurred trading in physical cash. We are also seeing schools adopting the service for fee payments.

What is the impact of new taxes introduced on digital payments meant for the sector?

The “robin-hood” tax would have been counterproductive in terms of encouraging cashless transactions and moved people back to cash payments. We were already starting to see the impact on large transactions and we are glad this was re-thought.

Doubling excise tax on transactions is a smaller evil. I do not think it will retard our growth towards a cashless economy. We, however, need to ensure we do not overburden the SMEs.

What is your take on the move by mobile network operators (MNOs) to launch mobile money interoperability between their networks and how soon will we have full integration with banks?

Interoperability is good for the customers and the MNO. We already share clients with MNOs and we hope we can completely remove the friction between customers and they can transact in a more convenient way. I am a heavy Pesalink user as well as a heavy M-Pesa user because each has unique advantages in varied scenarios.

We need to find a way to ease my customer experience between one service and the other. That is the destination of the interoperability journey between banks and MNOs. We are not quite there yet. Interoperability between MNOs is still in process. Operators are still figuring how to get it right and everyone is working out what their respective roles are and how to serve each other’s’ customers and this needs to settle down first.

How is cybercrime a challenge to your operations and how does Pesalink ensure the security of transactions remains paramount?

Cybercrime remains a risk that affects not only to the financial sector but cuts across all sectors in the economy. Hospitals, insurance, and manufacturing companies have been hacked for data and cybercrime will remain a constant threat into the future. Organisations must deploy adequate resources to remain vigilant and secure. This means dedicating a significant part of their budgets to the creation of resilient systems capable of detecting attempts. This investment can be quite high but the risk of getting hacked and losses that come with it is far larger.

We have a real-time fraud management system at Pesalink that monitors transactions and flags or blocks suspicious ones. Data analytics and machine learning are also applied to flag abnormal transaction patterns. Transactions are secured through a complementary layer of anti-fraud systems run by the respective banks. Banks further adhere to strict know your customer policies and since transactions can be traced down to the specific accounts.  

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