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This report provides is a comprehensive overview of the cards, payments and consumer banking market in Kenya.
Kenya is considered to be the economic, industrial and logistical hub of East Africa. It has increasingly led many transnational companies, such as Mastercard, to locate their regional headquarters in the capital city, Nairobi.
About 23 retail banks – including major issuers KCB, COBK and Barclays Kenya – currently offer Visa-branded credit cards in the country. The partnership with so many issuing banks explains Visa's dominant position in the credit card networks market.
Mastercard held a slightly higher proportion of debit card billed volume, with a six per cent estimated market share. Mastercard branded debit cards have only been issued in the Kenyan market since 2009, which explains the network's low market share.
TABLE OF CONTENTS
Consumer finance market
Pricing and enhancements
The networks: credit cards
The networks: debit cards
Merchant acquiring and processing
Regulatory and other cards market information
Appendix I: Demographics
Appendix II: The economy
Appendix III: Retail banking
Appendix IV: Consumer finance market
Appendix V: Cards market
Appendix VI: E-money
Appendix VII: Profit pool
Appendix VIII: Pricing and enhancements
Appendix IX: The networks: credit cards
Appendix X: The networks: debit cards
Appendix XI: Card issuers
Appendix XII: Merchant acquiring and processing
Appendix XIII: Online acquiring
Demographics and Economy
Kenya is the seventh-largest country by population in the African continent and is considered to be the economic, industrial and logistical hub of East Africa. The country has experienced dramatic population growth as a result of its high birth rate and declining mortality rate.
At the end of September 2017, Kenya had 42 commercial banks, 13 microfinance institutions and one mortgage finance company operating in the country. These institutions are regulated by the Central Bank of Kenya (CBK), which sets regulations, including minimum liquidity ratios and cash reserve ratios
Kenya is still a cash-based society, but cash usage has been slowly declining, from 94 percent in 2014 down to an estimated 88 percent in 2017, primarily due to the significant growth of mobile money during the last few years.
The launch of several mobile money deployments and widespread access to mobile devices has enabled consumers in Kenya to pay bills, receive cash from local merchants, and send money to their families without having to step into a bank branch.
Credit cards are not very popular in Kenya – credit card penetration stood at only about one card per 100 adults in 2017. A number of factors have hindered credit card issuing growth in Kenya, including low credit limits and a small pool of eligible customers.
Visa dominates the Kenyan credit cards market, with an estimated market share of 90% of cards in issue at the end of 2017, or approximately 223,000 cards. Debit cards are used predominantly at ATMs. Cardholders typically withdraw cash from the ATM and then transact using cash. Debit cards face fierce competition from mobile money deployments, particularly M-Pesa.
Key Retail Banks and Issuers
Barclays Kenya and COBK are the leading credit card issuers in Kenya. They had an estimated market share of 44% and 27%, respectively in 2017. The leading debit card issuers were Equity Bank (with a market share of 31%) and KCB (21%).
Acquiring and Processing
Merchant acquiring in Kenya is a small yet growing market. Traditionally it has been held back by a POS infrastructure that was limited. New POS installations ... helped boost merchant and consumer confidence. Most credit card issuing banks have their own in-house processing centres
for card transactions.
Popular e-commerce websites in Kenya are Jumia, Kilimall, Konga and OLX. Cash on delivery is the most popular payment method in Kenya; however, in the past few years, many transactions are paid for using mobile money like M-Pesa, and Airtel money.
Regulatory and Markets Information
The Central Bank of Kenya (CBK) is the supervisory authority of the financial market in Kenya. The CBK is responsible for authorising, supervising and regulating Kenyan banks and their business activities
Financial reports include detailed market and competitor intelligence on payments cards, e-money, acquiring, retail banking, and consumer credit in Africa. Analysts use primary and secondary source data and conduct in-depth interviews with senior industry executives and Africa finance experts.
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