CBK Extends KEPSS Payment Hours to 7PM Starting July 1: A Major Leap Towards Kenya’s 24/7 Digital Economy

In a significant announcement that reverberates across Kenya’s financial landscape, the Central Bank of Kenya (CBK) has unveiled a pivotal change to the country’s banking operations. Effective July 1, 2025, the working hours for the Kenya Electronic Payment and Settlement System (KEPSS), the nation’s Real-Time Gross Settlement (RTGS) system, will be dramatically extended from its current 8:30 AM to 4:30 PM schedule to an impressive 7:00 AM to 7:00 PM on all business days. This considerable increase marks a crucial stride in the CBK’s broader strategy to modernize and strengthen Kenya’s financial infrastructure, ultimately paving the way for a fully operational 24/7 digital economy.

According to the CBK, this strategic enhancement is the result of “extensive consultations with financial institutions and stakeholders,” reflecting a collaborative effort to adapt Kenya’s financial systems to the demands of a rapidly evolving digital world. The extension is also explicitly aligned with the ambitious goals outlined in the National Payments Strategy 2022–2025, a blueprint designed to foster a more robust and inclusive digital economy for Kenya.

“This strategic enhancement is aimed at improving the efficiency, accessibility, and resilience of Kenya’s payments ecosystem,” the monetary authority stated. “By enabling earlier initiation and later completion of large-value and time-sensitive payments, this move will support the country’s transition towards a 24/7 digital economy.”

KEPSS: The Indispensable Backbone of Kenya’s Financial System

Launched in 2005, KEPSS has long served as the fundamental backbone of Kenya’s high-value payment infrastructure. As a Real-Time Gross Settlement (RTGS) system, KEPSS processes payments individually and continuously, ensuring that transactions are cleared and settled in “real time” on a gross (one-by-one) basis. This contrasts sharply with “net settlement” systems, where multiple payments are batched together and settled at a later time, often at the end of the day.

The “real-time” aspect means that once a payment instruction is sent through KEPSS, the funds are immediately debited from the sending bank’s account at the Central Bank and credited to the receiving bank’s account at the Central Bank. The “gross settlement” ensures that each transaction is final and irrevocable, eliminating settlement risk between banks. This combination of real-time processing and gross settlement is crucial for:

• Reducing Systemic Risk: By settling transactions individually and instantly, KEPSS prevents a default by one participant from cascading through the entire financial system.
• Ensuring Payment Finality: Businesses and individuals receive immediate confirmation that their high-value payments have been irrevocably completed, providing certainty and trust in the financial system.
• Facilitating Large-Value Transactions: KEPSS is designed to handle the significant sums involved in interbank transfers, government payments, and corporate financial operations, which are often too large or time-sensitive for retail payment channels.

For Kenya, KEPSS supports a wide string of critical activities, including the settlement of interbank obligations, the processing of government revenue and expenditure, and the smooth execution of large corporate financial transfers. It is a vital artery for the flow of money within the formal financial system, directly impacting liquidity management for commercial banks and the overall stability of the financial market.

A Leap Towards a 24/7 Digital Economy: The Vision Behind the Hours Extension

The extension of KEPSS operating hours is not merely an operational adjustment; it is a profound strategic move by the CBK that is deeply embedded in Kenya’s broader economic aspirations. This aligns squarely with the nation’s ambition to become a fully functional 24/7 digital economy, a key pillar of President William Ruto’s economic agenda and the long-term Kenya Vision 2030.

Kenya has already made significant strides in digital payments, particularly with the widespread adoption of mobile money. However, a truly 24/7 digital economy requires robust, always-on infrastructure at all levels, from retail payments to large-value interbank settlements. By extending KEPSS hours, the CBK is addressing a critical gap, ensuring that the country’s high-value payment rails can keep pace with the demands of a modern, continuously operating economy.

This move underscores the CBK’s commitment to supporting seamless digital transactions that transcend traditional banking hours. In a world where global business operates around the clock, and digital services are expected to be instantly available, a central bank’s core payment system must reflect this reality. This enhancement allows Kenya to:

• Boost Global Competitiveness: Position itself as a more attractive financial hub for international businesses, enabling easier cross-border transactions and better alignment with global market hours.
• Facilitate E-commerce and Digital Business: Support the growth of online businesses that require immediate payment settlements, enhancing efficiency for both buyers and sellers.
• Improve Government Operations: Streamline the flow of public funds, from tax collection to disbursements, making government services more responsive and efficient in a digital age.

The CBK’s National Payments Strategy 2022–2025 emphasizes the need for an efficient, cost-effective, and faster payment system that is interoperable and robust. The KEPSS hour extension is a tangible step in achieving these objectives, creating the foundational infrastructure for future innovations and seamless digital transactions.

Operational Benefits: A Boon for Stakeholders

The revised KEPSS hours are set to deliver substantial operational benefits across various segments of the Kenyan economy:

For Financial Institutions: Enhanced Flexibility and Risk Management

Commercial banks are direct beneficiaries of this extension. With longer operating hours for KEPSS, banks will experience:

• Improved Liquidity Management: Banks can manage their cash reserves held at the CBK more efficiently throughout the day. This allows them to better respond to client demands for large-value payments and optimize their liquidity positions, potentially reducing the need for costly overnight borrowing.
• Reduced Operational Risks: The extended window for processing large-value payments mitigates the pressure of end-of-day cut-off times. This reduces the risk of payment backlogs, operational errors, and failed settlements, leading to smoother, more reliable operations.
• Better Customer Service: Banks can offer their corporate and high-net-worth clients a more flexible service for large transfers, enhancing client satisfaction and strengthening relationships.

For Businesses: Streamlined Cash Flow and Trade

The business sector, from large corporations to small and medium enterprises (SMEs) engaged in significant transactions, will see direct advantages:

• Optimized Cash Flow: Businesses can initiate and receive large payments earlier and later in the day, providing greater control over their cash flow. This is particularly beneficial for managing payroll, settling supplier invoices, and executing time-sensitive financial obligations.
• Facilitated Trade: Companies involved in cross-border trade will find it easier to make and receive payments within their international partners’ business hours. This reduces delays in trade settlements and enhances Kenya’s appeal as a trading partner. For example, a business importing goods from Asia can make a payment earlier in the day, allowing it to be settled within Asian business hours, accelerating the supply chain.
• Increased Flexibility: The extended hours allow businesses to execute large financial operations outside conventional banking hours, providing greater agility in a competitive environment.

For Government Agencies: Boosting Efficiency in Public Finance

Government payments, including tax collections, disbursements, and inter-agency transfers, are high-value and critical for public service delivery. The KEPSS extension will:

• Improve Revenue Collection: Allow for more flexible and timely receipt of large tax payments from corporations and other entities.
• Accelerate Disbursements: Enable faster distribution of funds for public projects, salaries, and social welfare programs, enhancing government efficiency and responsiveness.
• Enhance Financial Management: Provide government financial departments with greater flexibility in managing public funds throughout the day, ensuring better resource allocation and accountability.

The Fintech Frontier: The Quest for Direct Access to Core Infrastructure

While the KEPSS extension is a positive step, it also reignites the ongoing debate about the role of fintech companies and telecommunication providers in Kenya’s core payment infrastructure. Currently, direct access to KEPSS is primarily restricted to commercial banks and a few other highly regulated institutions. This has created a vibrant but often expensive mobile money ecosystem, with many fintech founders and users advocating for direct access to public infrastructure for more affordable and competitive services.

The core of this advocacy stems from several points:

• Affordability: Fintechs argue that without direct access to the underlying RTGS infrastructure, they are often forced to route payments through commercial banks, incurring additional fees. Direct access could potentially reduce transactional costs for customer-to-business (C2B) payments, making digital transactions more affordable for a wider population.
• Competition and Innovation: By lowering entry barriers, direct access could foster greater competition in the payments space. This would encourage fintechs to develop more innovative and tailored financial products and services, driving the overall modernization of the sector.
• Efficiency: Direct access would streamline payment flows, reducing reliance on multiple intermediaries and potentially speeding up the settlement of certain digital transactions.

However, the CBK, as the monetary authority, faces a complex balancing act. While keen to foster innovation and financial inclusion, it must also prioritize financial stability, cybersecurity, and consumer protection. Granting direct access to non-bank entities raises critical questions regarding:

• Risk Management: How would the CBK ensure that non-bank participants adhere to stringent risk management standards, particularly for high-value payments?
• Cybersecurity: Expanding direct access could increase the attack surface for cyber threats, necessitating robust security frameworks and continuous monitoring.
• Regulatory Oversight: The CBK would need to develop comprehensive regulatory frameworks tailored to non-bank entities participating in the core payment system, ensuring a level playing field and protecting consumers.
• Data Privacy: With more entities involved in payment processing, ensuring the privacy and security of sensitive financial data becomes even more critical.

While the CBK has not explicitly announced its next steps regarding non-bank access to KEPSS, the extension of operating hours signals a gradual evolution of the payments landscape. It suggests that the regulator is building the operational capacity and resilience necessary for a future where broader participation might be considered. Such a move could potentially involve a tiered access model or the development of a separate, interoperable retail payment layer, drawing lessons from global examples.

Global Benchmarks: Kenya on the World Stage

Kenya’s decision to extend KEPSS hours mirrors a progressive global trend where central banks are increasingly modernizing their payment systems to support real-time, 24/7 economies. This strategic alignment positions Kenya firmly on the global stage alongside nations that have successfully implemented advanced real-time payment infrastructures:

• India’s Unified Payments Interface (UPI): Launched in 2016, UPI has transformed India’s payment landscape. It is a real-time system that facilitates instant inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions using simple identifiers like mobile numbers or unique UPI IDs. UPI has seen phenomenal growth due to its affordability (often free or minimal fees) and ease of use, making India a global leader in digital payments. Crucially, while the underlying settlement happens on an RTGS equivalent, UPI allows widespread participation through various third-party applications, including those from non-bank entities, fostering massive scale and financial inclusion. India’s UPI now accounts for nearly half of all global digital payments.
• Singapore’s PayNow: Introduced in 2017, PayNow enables instant funds transfers between individuals and businesses using mobile numbers, NRIC/FIN, or unique payment addresses. Operating on Singapore’s Fast and Secure Transfers (FAST) rail, PayNow provides a highly efficient and convenient real-time payment experience, contributing to Singapore’s status as a leading fintech hub.
• Europe’s SEPA Instant Credit Transfer (SCT Inst): The European Union has also mandated the adoption of instant payments across the eurozone. The Instant Payments Regulation (IPR), set to be fully effective by January 2025, requires banks to offer euro-denominated instant payments that settle within 10 seconds, 24/7. This initiative aims to enhance competition, improve cross-border transactions within the Single Euro Payments Area (SEPA), and support financial inclusion, though the focus is primarily on interbank settlement with stricter regulations for non-bank access compared to UPI.

By aligning with these global trends, the CBK is not just improving domestic efficiency but also preparing the groundwork for greater regional integration and interoperability. A more robust and responsive KEPSS facilitates smoother cross-border transactions with neighboring East African countries and beyond, enhancing Kenya’s role as an economic gateway in the region.

ISO 20022: Modernizing the Messaging Standard for Global Interoperability

Beyond the extended hours, a critical underlying modernization effort supporting KEPSS is its transition to the ISO 20022 Global Messaging Standard in October 2024. This move is hugely significant for enhancing the functionality and interoperability of Kenya’s payment system.

ISO 20022 is an international standard for electronic data interchange between financial institutions. It provides a common platform for developing messages in the financial industry, offering richer, more structured, and more detailed data than older messaging standards like SWIFT MT. The benefits of this transition are substantial:

• Richer Data: ISO 20022 messages carry significantly more structured data compared to legacy formats. This means payment instructions can include more detailed information about the sender, receiver, purpose of payment, and underlying invoices. This richer data improves reconciliation for businesses, enhances fraud detection capabilities for banks, and facilitates compliance with regulatory requirements.
• Improved Interoperability: By adopting a globally recognized standard, KEPSS can communicate more seamlessly with other payment systems around the world that are also migrating to ISO 20022. This “common language” for payments streamlines cross-border transactions, reduces errors, and increases the ease of doing business globally.
• Enhanced Efficiency: The structured nature of ISO 20022 data allows for greater automation in payment processing, reducing manual interventions and improving overall efficiency within financial institutions.
• Future-Proofing: Adopting ISO 20022 positions KEPSS at the forefront of global payment innovation, ensuring it can accommodate future technological advancements and new payment services.

This combination of extended operating hours and the adoption of a modern messaging standard demonstrates the CBK’s holistic approach to transforming Kenya’s payments infrastructure, making it more resilient, efficient, and globally connected.

Challenges and the Road Ahead

While the extension of KEPSS hours is a monumental step forward, the journey towards a fully mature 24/7 digital economy presents ongoing challenges that require continuous attention and strategic planning:

• Cybersecurity Vigilance: Operating a core financial system for longer hours inherently increases its exposure to cyber threats. The CBK and participating financial institutions must continuously invest in state-of-the-art cybersecurity measures, robust fraud detection systems, and resilient disaster recovery protocols to safeguard the integrity of the system and protect financial data.
• Infrastructure Readiness: While KEPSS itself is being upgraded, all financial institutions that connect to it must ensure their internal systems and processes are fully capable of handling the extended operational window. This may require further IT investments, system upgrades, and staff training to manage round-the-clock operations.
• Digital Literacy and Financial Inclusion: While Kenya boasts high mobile money penetration, ensuring that all segments of the population, particularly in rural and underserved areas, can fully benefit from advancements in the formal banking sector requires continued efforts in digital literacy and financial education. Bridging the digital divide remains crucial.
• Regulatory Evolution for Direct Access: The debate surrounding direct non-bank access to KEPSS or a comparable RTGS layer will likely intensify. The CBK will need to carefully consider how to balance fostering innovation and competition with maintaining financial stability and consumer protection. This might involve a phased approach, sandbox environments, or new licensing frameworks for payment service providers.
• Cost of Compliance: For smaller financial institutions, the cost of upgrading systems to align with extended hours and new messaging standards like ISO 20022 could be significant, requiring support or staggered implementation strategies.

Despite these challenges, Kenya’s strategic decision to extend KEPSS operating hours is a bold statement of intent. It reflects a proactive approach by the Central Bank of Kenya to build a modern, efficient, and inclusive financial ecosystem. By embracing global best practices and continuously enhancing its core infrastructure, Kenya is not only strengthening its domestic economy but also solidifying its position as a leading financial and technological hub in East Africa, ready to meet the demands of the digital future. The continuous evolution of KEPSS is a testament to Kenya’s commitment to unlocking the full potential of its digital economy for all its citizens.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

19th June, 2025