Safaricom’s M-Pesa to join Pesalink as Central Bank plans new payment system

Safaricom’s M-Pesa is set to join the Pesalink network, which could significantly reshape Kenya’s digital payments landscape. In a proposal submitted jointly with the Kenya Bankers Association (KBA) to the Central Bank of Kenya (CBK), Safaricom wants to integrate M-Pesa, Kenya’s largest mobile money platform, into the national interbank payment system, Pesalink, which already connects 39 banks across the country.

This integration is expected to break down the barriers between mobile wallets and traditional bank accounts, creating a more unified payments ecosystem in Kenya. It could make transferring money between mobile wallets and bank accounts faster and more seamless for millions of Kenyans, bridging the gap between mobile money and the formal banking sector.

Currently, Pesalink, operated by Integrated Payment Services Limited (IPSL), facilitates instant bank-to-bank transfers but does not include mobile money services like M-Pesa. By joining the network, Safaricom would allow M-Pesa users to transact with any bank without the need for separate agreements between banks and mobile money providers. 

It aligns with the CBK’s broader goal of streamlining payments and fostering financial inclusion through a new Fast Payment System (FPS), which aims to allow smooth cross-platform transactions.

“The majority of the industry is already connected to the IPSL switch with Safaricom M-Pesa set to join the switch soon,” Safaricom and KBA said in their report. 

The announcement signals the push towards a more integrated payments infrastructure supporting a wider range of financial products and services across Kenya.

Safaricom did not immediately respond to requests for comments.

The integration of M-Pesa into the Pesalink network could also be a key component of the CBK’s planned FPS initiative, which will allow instant, low-cost transactions between various financial institutions, including commercial banks, SACCOs (Savings and Credit Cooperative Organizations), and microfinance institutions.

One key benefit of this integration is the potential to reduce transaction costs. Sending money via M-Pesa costs significantly more than transferring funds through traditional banks. For example, sending KES 10,000 (USD $77.22) via M-Pesa costs approximately KES 100 (USD $0.77), while bank transfers via Pesalink can be significantly cheaper, with charges ranging from KES 30 (USD $0.23) to KES 50 (USD $0.39).

“Integrating M-Pesa with PesaLink would create a more seamless and interconnected financial ecosystem. This would allow users to easily move money between mobile wallets and bank accounts, breaking down the current silos between these systems,” said Ali Hussein Kassim, Association of FinTechs in Kenya chairman.

An integrated payments network could make it easier for small businesses to accept payments across different platforms without operating multiple wallets, a huge step forward for payments in Kenya.