Commercial banks will now clear foreign currency-denominated cheques within two days following an upgrade to the electronic funds-transfer system.
In an enhancement to Automated Clearing House (ACH), the system will enable centralization of all instructions made by customers and allow third parties to request withdrawals from a customer’s account on agreed dates.
Kenyan banks clear Kenya shilling, pound sterling, US dollar and Euro-denominated cheques.
Local currency cheques are cleared after transaction date plus one day (T+1 cycle), meaning funds will be available to the payee one day after the cheque is presented by the paying bank.
Foreign currency cheques were previously cleared on a seven work day cycle. The payee will now receive money two days after the cheque is presented in the ACH.
Under the enhancement made in three projects in partnership with Central Bank, the process also includes a compilation of remitter and payee information in payment file.
This is to shorten the turnaround time in case of a wrong transaction or while mitigating fraud.
According to Kenya Bankers Association, the integration is set to increase uptake from customers, service providers, utility companies and other institutions that pay for services on a recurring basis.
The advancement comes at a time when cashless payments have been ruling the Kenyan money economy, and banking sector facing stiff competition from mobile money services.
According to Central Bank data, the volume of transactions through Kenya’s national payments system, Kenya Electronic Payment and Settlement System (KEPSS), were more than 4.57 million and were valued at Sh29.387 trillion in 2018.