The Central Bank of Kenya (CBK) has announced a transition from the Kenya Electronic Payment and Settlement System (KEPSS) to the internationally recognized Global Messaging Standard (ISO 20022 Standard).
ISO20022 is the latest international open standard for financial messaging that is being adopted globally.
“KEPSS, which is Kenya’s Real-Time Gross Settlement (RTGS) system, is operated by CBK to process large-value and time-critical payments. It is the backbone of Kenya’s domestic and regional payment transactions,” CBK said in a statement.
Last month the regulator directed banks and microfinance banks to commence testing of the upgraded system for messaging high-value financial transactions to increase speed of transfers while heightening the screening for fraud.
In the period between August 2023 and August 2024, KEPSS processed a total of over 5.3 million transactions valued at over Sh45 trillion for local currency transactions.
The migration will lead to faster settlement times, streamlined processing, and improved liquidity management for financial institutions.
The Standard’s rich data formats will aid in monitoring fraud and improve the detection and prevention of illicit transactions.
CBK says that the standardisation provided by the new platform reduces the complexity of payments and significantly enhances efficiency.
The adoption of the system was supposed to go live on September 30, 2024, earlier than the deadline set by the Society for Worldwide Interbank Financial Telecommunications (SWIFT) which is at the beginning of 2025.
The ISO20022 Standard will enhance interoperability between domestic and international payment systems, facilitating easier cross-border transactions and increasing the ease of doing business globally.
Overall, these benefits will enhance the convenience, speed and security of payments for corporations and customers alike.
The milestone of this migration is a significant achievement in the modernisation of Kenya’s National Payments System (NPS).
It positions the country as a leading and globally competitive payment destination.
With this migration, Kenya joins other regional and global economies in the adoption of the ISO20022 Standard for large-value payment systems.
SWIFT and other major electronic payment stakeholders have said that ISO 20022 is the way of the future as it is the most comprehensive financial data standard in existence today.
By availing richer more detailed data, it can drastically reduce the incidence of fraud and cybercrime throughout domestic, and international high-value payments.
The adoption of the ISO20022 Standard is a key component of the National Payments Strategy 2022 - 2025 and builds upon major initiatives led by CBK in conjunction with the industry. T
This includes the migration of the Cheque Clearing House to the ISO20022, among others.
CBK has directed banks to inform their customers and provide necessary support to ensure seamless service.
“CBK is committed to continuous improvement and renewal of Kenya’s payments infrastructure to meet the evolving needs of the economy and support the country’s vision of becoming a global financial hub,” CBK noted.