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Kenyan banks to launch their own mobile cash transfer system powered by Kenya Inter-participant Transaction Switch (KITS) by early April, 2017

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Kenya Inter-participant Transaction Switch (KITS)
  • 10 months ago
  • Posted: February 8, 2017 at 1:00 pm

About six banks, out of the 43 who are members of the Kenya Bankers Association (KBA), have received regulatory approval from Central Bank of Kenya (CBK) to launch a mobile money transfer platform. These platforms will run on the Kenya Inter-participant Transaction Switch (KITS).

“At the moment, about six banks have received approvals to launch the product. Approvals started coming in around two weeks ago. We started operating the system on a pilot basis towards the end of last year and will now move to incorporate the approved banks and their customers as and when they receive the go-ahead. Once a bank gets approved, they immediately start on-boarding customers onto the system”

-Habil Olaka, KBA CEO

Through the new Switch, customers transacting Ksh.500 and below will not pay any fees. It will also be relatively cheaper to transact on the platform. As an example, it will roughly cost you Ksh.20 to transact Ksh.2,700 through the platform against the Ksh.55 charged on M-Pesa. The recipient of money transferred through the new platform will get a code from the sender and use it to make payments to another person’s bank account or withdraw the cash from banking agents. This will also see to it that individuals with no bank accounts are still able to use the platform.

The Kenya Inter-participant Transaction Switch (KITS) was established in 2012 by KBA. The sole purpose of this project was to address the challenge of creating a more integrated and inter-operable retail payments platform. To implement the interoperability strategy, KBA formed Integrated Payments Service Limited (IPSL) as a subsidiary company to manage the commercial aspects and running of the system.

KITS was meant to facilitate real-time money transfer between banks without going through mobile money products namely, M-Pesa, Airtel Money and Orange Money. Apart from that, it would also shorten the clearance time for cheques which currently take at least two working days to clear.

“The new system will enable customers make one direct transfer between accounts without having to go through several systems such as mobile money wallets, which charge you at every stage.”

-Habil Olaka, KBA CEO

KITS also sought to extend the hours for payments made through real-time gross settlement (RTGS) systems that currently process payments between 0800hrs and 1500hrs on weekdays. The downside of RTGS is that it takes four hours or more to reflect on the recipients account. Contrary to this, the switch will offer real-time settlements.

“Customers will be able to push money between different accounts and the funds will reflect within 45 seconds. These are some of the system’s efficiencies.”

-Habil Olaka, KBA CEO

The Kenya Interbank Transaction switch is expected to launch in the next two months. You will have to visit your bank branch to get on board the service. Financial intermediary products and solutions developed by IPSL will be delivered under the applicable regulatory provisions and regulated by the Central Bank of Kenya.

“We expect to launch the platform in about eight weeks, or even less, depending on how comfortable we shall be at the time. We do not need to get all 43 banks on board in order to go live; we simply need a critical mass of customers.”

-Habil Olaka, KBA CEO

Once complete, the IPSL system, will provide a safe, secure and cost efficient platform for person-to-person (P2P) money transfer. These transfers will be initiated from the five main bank channels: Mobile banking (USSD & Application), Internet banking, ATM, Branch front office, Agency Banking and POS.

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Mr. Felix

A Math Nerd and a Computer Geek. Currently a Windows 10 Insider. Interested in AI, big data and AR/VR. Takes a keen interest in developments in the tech, business and social media spheres.


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