Kenya’s digital payment system is built on a layered infrastructure where mobile money platforms, commercial banks and central bank settlement systems operate in parallel. By 2026, that structure is moving toward tighter interoperability, driven by regulatory standards and cloud-native core banking upgrades that allow funds to move faster across institutions.
At the retail level, mobile wallets dominate daily transactions. Bank-led real-time switches handle higher-value transfers, while the Central Bank of Kenya settles final obligations between lenders. Each layer plays a distinct role in how money moves across the economy.
M-Pesa: The Mobile Money Rail
M-Pesa remains the country’s primary transaction rail for low- and mid-value payments. The platform operates as a distributed ledger system managed by Safaricom and has evolved into what the company describes internally as a second-generation fintech platform.
By 2026, M-Pesa runs on a cloud-native, active-active architecture spread across multiple data centres, a design intended to maintain system availability even during hardware or network failures. The infrastructure targets 99.9% uptime.
Most customer payments, including Lipa Na M-Pesa, rely on the STK Push mechanism. When a merchant initiates a payment request through Safaricom’s Daraja API, the M-Pesa core sends a command directly to the customer’s SIM card. The phone displays a system-level prompt that does not require an internet connection, asking the user to enter their PIN to approve the transfer from their wallet to the merchant’s shortcode.
Behind the scenes, Safaricom is required to hold physical cash equal to all e-money in circulation. These funds sit in trust accounts across several commercial banks, ensuring customer balances are fully backed.
The platform’s processing capacity has expanded sharply. By 2026, M-Pesa is designed to handle up to 8,000 transactions per second, double its 2025 capacity. Load distribution is handled through database sharding across more than 700 servers.
PesaLink: The Interbank Switch
For bank-to-bank transfers, PesaLink serves as the country’s primary real-time switch. The system is operated by Integrated Payment Services Limited, a company owned by Kenyan banks.
PesaLink processes transfers in under 45 seconds, replacing electronic funds transfers that once took hours or days. The switch runs on the ISO 20022 messaging standard, an upgrade from ISO 8583, enabling banks to attach richer transaction data such as remittance details and tax identifiers.
A key feature is alias mapping. PesaLink maintains a central directory linking mobile phone numbers to bank account identifiers. When a customer selects “Send to Phone” within a banking app, the switch identifies the destination bank and account tied to that number and routes the funds accordingly.
Transaction limits are significantly higher than those on mobile money platforms. PesaLink supports transfers of up to KSh 1 million per transaction, making it suitable for salary payments, business settlements and high-value personal transfers.
KEPSS: Final Settlement at the Central Bank
At the top of the payment stack is the Kenya Electronic Payment and Settlement System, operated by the Central Bank of Kenya. KEPSS functions as the country’s real-time gross settlement system for large-value and interbank transfers.
When funds move between banks, the final settlement takes place in the reserve accounts that commercial banks hold at the central bank. Even transactions initiated through retail systems such as PesaLink ultimately rely on KEPSS to complete the movement of central bank money.
Retail switches typically process individual customer payments instantly but settle obligations between banks on a net basis. These net positions are then cleared through KEPSS at scheduled settlement windows during the day, reducing liquidity pressure while maintaining finality.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.