CBK implements new rules for electronic money transfer

By JACKSON OKOTH

The Central Bank of Kenya (CBK) has launched new regulations to protect consumers and players in the booming electronic money transfer business.

According to the new rules, a payment service provider, other than a licensed bank, financial institution and an authorised electronic money issuer, will be required to have a core capital of not less that Sh10 million.

Clients will also be allowed to file complaints against payment service providers, which must be addressed within 60 days.

"We are creating these guidelines to protect consumers and service providers as well as grow the market," said CBK Governor Prof Njuguna Ndung’u.

He made these remarks on Thursday while launching electronic and mobile payment regulations at the Kenya School of Monetary Studies, Nairobi.

"We have been receiving numerous requests, a fact that necessitated the need to create measures that mitigate risk in the business," said Prof Ndung’u.

Rules for the money transfer business have been put in place at a time when a National

Payments Bill is almost ready.

This new law is expected to lay the ground for establishment of independent payment systems from the present banking platform.

CBK Governor Prof Njuguna Ndung’u during the launch of the draft electronic retail transfer regulations. [PHOTO: JONAH ONYANGO/ STANDARD].

Currently, commercial banks have been the main players in the electronic payments arena.

"We have an oversight role and mandate to ensure safety and efficiency of the payment system to safeguard it from collapse," said Stephen Mwaura Nduati, Head of National Payments Unit at CBK.

Grace period

The regulations took effect on February 3, 2011. Payment service providers who commenced their delivery of retail transfers before this effective date will be allowed a period of 12 months from the effective date to comply with this regulation.

"Mobile service provider, Safaricom made an application to enter the money transfer service in 2007. We gave a ‘no objection’ letter to them and since then, mobile money transfer has grown tremendously," said Nduati.

The latest entrant in the mobile cash transfer business is Mobile Pay Ltd.

Apart from MPesa, other products in the mobile money market include Zap by Airtel, yu cash and orange money.

Figures indicate that over the last four years, mobile cash transfer service has grown to an estimated 15.4 million customers and recruited over 39,449 agents.

Total transactions have now reached Sh2.45 billion a day and Sh.76 billion a month.

"This reflects the fact that when cost of transactions decline, the volume of transactions increase," said Prof Ndung’u.

CBK is rolling out rules to govern electronic cash transfers at a time when there is an explosion of electronic crime worldwide.