Banks are stepping forward to challenge the dominance of MPesa in the digital payments business, a charge that is being led by Equity Group, Kenya Commercial Bank(KCB) and NCBA Bank.
Thus, KCB Group’s move to buy a minority shareholding in venture capital firm- PesaPal, is poised to alter the level of competition in Kenya’s red hot digital payments business.
KCB’s integration with PesaPal will provide an alternative in a market littered with Apps that are slow, tedious and costly to set up.
KCB’s latest move in the digital space comes a few months after it bought out Riverside Solutions for KSh 2 billion, a local fintech firm that has footprints in other regional markets in East Africa.
This acquisition how enhances KCB’s digital capabilities in offering its SME and MSME customers with business management tools such as inventory management, financial reporting and payroll management. It will also provide other solutions namely Swipe platform for agency banking services, Zizi for revenue collection and CheckSmart for social payments.
Banks on the cutting edge of digital payments solutions
NCBA remains top of the heap with its M-Shwari platform, NCBA Connect Plus, NCBANow and Loop, a digital and financial infrastructure embedding credit and payments directly into transactions, allowing users to access credit and make payments in a single transaction. Equally, Equity Group which boasts of the largest balance sheet size has one of the largest cache of digital payments solutions
KCB investment in PesaPal moves the level of competition a notch higher in digital payments, as players rush for attention from a growing but cash-strapped small and micro enterprises segments.
The KCB-PesaPal deal will allow the bank to tap into PesaPal network and technology to provide cutting edge payment solutions for small and micro enterprises across Kenya.
This acquisition follows a similar script in March this year when KCB announced its acquisition of 75% majority stake in Riverbank Solutions, a local fintech firm, for a sum of KSh 2 billion.
With a regional footprint in Tanzania, South Sudan, Uganda, Rwanda, Burundi, and the Democratic Republic of Congo, KCB is aggressively integrating its platforms to those of fintech firms.
Banks are tapping into Kenya’s rapidly growing demand for digital financial solutions, fuelled by rising mobile penetration rates as Kenyans switch their spending patterns to digital channels. Banks are also entering the space to remain competitive and follow the customer.
Fintechs, on the other hand, are creating user friendly platforms while banks are innovating on the products front and loading the cash.
On conclusion of this deal, KCB will ride on PayPal’s dominant presence in the online payments space as well as enterprises that use PesaPal for payments solutions benefiting from such features as bulk payments and fund disbursement.
Retailers are increasingly using platforms such as use PesaPal for in-store payments processing and online transactions.
PesaPal has integrated into hospitality platforms like Reserveport, providing a window for KCB to play in the payment processes with the country’s vibrant hospitality business.
Established in 2009, PesaPal has enabled businesses and entrepreneurs to collect money online and in-person via mobiles and cards. It also offers digital tools for ticketing, reservations, reporting, inventory, merchant credit and APIs
PesaPal, which is regulated by the Central Banks of Kenya, Uganda, Tanzania, Rwanda & Zambia, is on a strategy to connect a million African entrepreneurs and customers to electronic payments, e-commerce, and the global financial system by 2030.
Kenya’s digital payments market is huge with mobile money agents facilitating transactions worth KSh 8.7 trillion in 2024. According to Fintech Kenya, this market is forecast to grow at 14.1% annually between 2024-2028 reaching US$ 14.5 Billion by 2028. Banks are thus keen to have a bite of this huge cake.
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