Postbank's 600 Outlets Join PesaLink in Push Against M-PESA

By Nathan Brooks

Kenya's state-owned Postbank has opened more than 600 branches and agent outlets to customers of other banks through PesaLink, the country's interbank payments network. A customer of any participating bank can now walk into a Postbank outlet, deposit cash, and have it credited directly to an account held elsewhere — no Postbank account required.

That's a structural change. Until now, banks largely had to negotiate individual agreements to access another institution's agent network. Gituku Kirika, chief executive of Integrated Payment Services Limited (IPSL), the company behind PesaLink, said banks and SACCOs now have an opportunity to "open their existing agent networks to other institutions, allowing customers to access cash services through agents beyond those operated by their own financial institution."

How big is PesaLink now?

Postbank's addition takes the network to 80 financial institutions — commercial banks, microfinance firms and savings and credit co-operatives. It added 12 members over the past year, bringing all 38 licensed commercial banks in Kenya onto the same payments system.

The volumes are real. PesaLink processes an average of KES 4 billion ($30.8 million) daily, up 24% year on year, and KES 110 billion ($846.5 million) monthly, up 41%. About 98% of transactions succeed, according to the network.

The Kenya Bankers Association incorporated IPSL in 2015 under the National Payment System Act. The rationale was simple: Safaricom's M-PESA had grown from a person-to-person transfer service into the payment system much of Kenya's economy ran on, and banks were watching customers move money through a network they didn't own. IPSL's job was to build a shared, round-the-clock system for account-to-account transfers, making bank payments cheaper and reducing cash reliance.

Why hasn't PesaLink beaten M-PESA?

M-PESA spent years building more than 260,000 agents, and shops, supermarkets, small traders and utility companies made it a routine way to collect payments. Customers could send money, withdraw cash and pay bills from one wallet. Banks had no comparable reach beyond branches and ATMs.

Banks also hurt their own platform. Some charged hefty fees for transfers between bank accounts and mobile wallets, while PesaLink sat buried in mobile banking apps. Customers had little reason to find a service they barely knew existed. Banks couldn't sell PesaLink as a shared consumer brand with M-PESA's recognition.

Then there's the regulator. The Central Bank of Kenya is developing a national Fast Payment System (FPS) that could serve banks, mobile money operators and other institutions on a common network. It could expand PesaLink's role — or create a rival. If the CBK builds a separate system, banks could compete with infrastructure they hoped to control.

So far, PesaLink has won more ground with businesses than consumers. Companies use it for supplier payments, payroll and bulk transfers. Getting someone to use it for a KES 500 ($4) shopping bill is a different matter.

What does pricing actually look like?

Nineteen banks and microfinance institutions — including KCB, Absa, Diamond Trust Bank and Stanbic — have adopted a discounted pricing model:

• Transfers below KES 1,000 ($7.69): free
• Transfers between KES 1,001 ($7.70) and KES 999,999 ($7,692.30): flat KES 20 ($0.15)

Not everyone has signed up. Equity Bank, Co-operative Bank, Standard Chartered and NCBA still set their own fees — up to KES 35 ($0.27) for smaller transfers and up to KES 250 ($1.92) for larger sums. The cost of sending money depends on which bank you use, even though the money moves through the same network.

How does that compare with mobile money?

M-PESA keeps transfers below KES 100 ($0.77) free. A few hundred shillings costs up to KES 13 ($0.10); larger transfers max out at KES 108 ($0.83), even at the full KES 250,000 ($1,923.08) transaction limit. Airtel Money makes transfers within its own network free, and charges KES 7–13 ($0.05–$0.10) below KES 1,000 and KES 100–108 ($0.77–$0.83) for larger amounts, up to its KES 250,000 limit.

On price, PesaLink wins for large sums. Sending KES 200,000 ($1,538.46) through M-PESA costs KES 108 ($0.83); on the discounted PesaLink tariff it costs KES 20 ($0.15). PesaLink also allows single transfers up to KES 999,999 ($7,692.30), versus KES 250,000 on M-PESA and Airtel Money — both of which cap daily transactions at KES 500,000 ($3,846.15).

The last-mile problem

Price is only part of the decision. Funds received through PesaLink land in a bank account, and spending them may require a debit card, an ATM withdrawal, or another transfer to a mobile wallet. Money received on M-PESA or Airtel Money is already in a wallet a customer can use at a kiosk, for airtime, or to settle household bills.

Postbank and the other partner banks widen PesaLink's reach, but they don't solve the banks' bigger problem: customers need a reason to use bank accounts for everyday payments, not just a cheaper way to move money between them. Until banks fix their pricing and make PesaLink easier to use, M-PESA remains the first stop for most Kenyans paying for goods and services.