Kenya’s banking sector has finally drawn a line in the sand against mobile money dominance, announcing a sweeping overhaul of the interbank transfer system that prioritizes affordability and ease of use.

Integrated Payment Services Limited (IPSL), the operator behind the Pesalink switch, confirmed plans to slash transaction fees to under KSh 10 and introduce 'Pesalink ID'—a move designed to simplify payments and aggressively target the Person-to-Merchant (P2M) market currently ruled by Safaricom’s M-Pesa.

The Battle for the Micro-Transaction

For years, the complexity of bank transfers—requiring long account numbers and routing codes—has kept the average Kenyan consumer tethered to SIM-based wallets. Gituku Kirika, the CEO of Pesalink, acknowledged this friction in an interview with TUKO.co.ke, outlining a strategy to dismantle these barriers.

The centerpiece of this overhaul is the 'Pesalink ID,' a feature expected to function similarly to a phone number or a simple alias, eliminating the need for users to memorize cumbersome bank details. By coupling this with a sub-KSh 10 price point, IPSL is making a direct play for the 'kadogo' economy, where high transaction fees often discourage digital payments.

• Cost Reduction: Transaction fees dropped to below KSh 10 to encourage high-frequency, low-value usage.
• Simplified Identity: 'Pesalink ID' replaces complex account numbers, streamlining the user experience.
• Merchant Focus: Enhanced P2M capabilities to allow direct bank-to-till payments at retail outlets.

Breaking the 2% Ceiling

The urgency of this pivot is underscored by a startling statistic: despite the proliferation of banking apps, lenders control a fraction of the payments ecosystem. Kirika revealed that banks currently hold less than 2% of Kenya's payments market share, a figure that highlights the overwhelming hegemony of mobile network operators.

"The strategic plan aims to enhance the market share of instant payments," Kirika noted, emphasizing that the future lies in seamless integration between consumers and merchants. By lowering the barrier to entry, banks hope to entice Kenyans to keep their money circulating within the banking system rather than cashing out to mobile wallets immediately.

As the digital payments landscape tightens, the consumer stands to win. With banks finally offering a price-competitive and user-friendly alternative, the era of monopolized digital payments in Kenya may be facing its stiffest test yet.