The Central Bank of Kenya (CBK) has announced a transition of 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.
CBK in a statement on October 15, 2024, said the switch to the new standard seeks to streamline Kenya’s National Payments System (NPS) and concurrently achieve the transmission of high-value, time-sensitive international and domestic payments.
The IS0 20022 standard is touted as the magic bullet towards enabling all global electronic payments through financial institutions to be safe, secure and interoperable from one jurisdiction to another.
“The Central Bank of Kenya (CBK) announces that, effective today, the Kenya Electronic Payment and Settlement System (KEPSS) has been successfully migrated to the ISO20022 Global Messaging Standard (“ISO20022 Standard”). KEPSS, which is Kenya’s Real-Time Gross Settlement (RTGS) system, is operated by CBK to process large-value and time-critical payments,” read part of the statement.
“It is the backbone of Kenya’s domestic and regional payment transactions. In the period between August 2023 and August 2024.”
According to the Central Bank, KEPSS processed a total of over 5.3 million transactions valued at over Ksh45 trillion for local currency transactions.
CBK moves to ISO20022 Standard
The Central Bank has directed banks to inform their customers and provide necessary support to ensure seamless service.
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While announcing the transition, CBK maintained that it 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.
Commercial banks in Kenya under the auspices of the Kenya Bankers Association (KBA) in March 2023 held a function held to launch an upgrade of the Automated Clearing House (ACH) to the ISO 20022 standard.
During the event, the KBA said that local bank customers would be expected to access faster clearing services for cheques, direct debits and electronic funds transfers courtesy of the upgraded ACH.
It was established to facilitate the transfer of payments and conforms to the ISO 20022 digital payment standard that is now a global phenomenon and by the year 2025, a universal industry standard.
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The deadline set by the Society for Worldwide Interbank Financial Telecommunications (SWIFT) is at the beginning of 2025.
Benefits of ISO20022 Standard
CBK in the statement has maintained that the ISO20022 Standard will bring major improvements to customers and institutions in the ACH, noting that it is in line with the National Payments Strategy 2022 – 2025 that was launched in February 2022.
“The migration of KEPSS to ISO20022 brings significant benefits, including 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,” the statement adds.
Additionally, CBK has highlighted that the standardization provided by ISO20022 reduces the complexity of payments and significantly enhances efficiency.
The Central Bank said that ISO20022 Standard will enhance interoperability between domestic and international payment systems facilitating easier cross-border transactions and increase the ease of doing business globally.
Overall, these benefits are expected to enhance the convenience, speed and security of payments for corporates and customers alike.
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