Kenya’s Cards and Payments Industry: Emerging Opportunities, Trends, Size, Drivers, Strategies, Products and Competitive Landscape

Kenya is developing into a hub for electronic payments, and is likely to become a focal point for wider growth across east Africa. A number of economic and demographic factors have driven the growth of the Kenyan cards and payments industry. The country is renowned as one of the most peaceful and stable in Africa. Demographically and economically, the country is well positioned, with an average age of just 18, and expectations of healthy GDP growth over the forecast period (2014–2018). Young populations are typically more willing to embrace innovation and technology, and have long working lives ahead of them, making them more likely to become wealthier and consume more banking products and services.

In terms of the number of cards in circulation, Kenyan payment cards (including debit, credit and charge cards) registered robust growth during the review period (2009–2013), recording a compound annual growth rate (CAGR) of 26.32%, increasing from 3.8 million cards in 2009 to 9.7 million in 2013. In terms of transaction value, payment cards valued KES1.5 trillion (US$18.5 billion) in 2013, after registering a significant review-period CAGR of 34.40%.

The average transaction value (ATV) in Kenya was US$49.3 in 2013, which was the fourth-highest among its peer countries. Egypt recorded the highest ATV, with US$97.7, followed by Morocco with US$94.3, South Africa with US$54.6 and Nigeria with US$38.4. In terms of card penetration, Kenya recorded 0.22 cards per inhabitant in 2013, while South Africa, Morocco, Nigeria and Egypt recorded respective amounts of 1.25, 0.33, 0.20 and 0.18. In terms of frequency of use, Kenya recorded 35.5 transactions per card in 2013, while South Africa, Morocco, Egypt and Nigeria recorded 38.2, 21.1, 15.7 and 12.0 respectively.

The Kenyan prepaid market remains in its early stages – fragmented and uneven, but growing quickly despite heavy competition from M-Pesa. To capture the untapped market, banks, card issuers and retailers are launching prepaid card variants. In October 2012, Kenya’s largest retail chain, Nakumatt, launched the Nakumatt Global MasterCard Prepaid card, enabled with contactless technology. MasterCard collaborated with Nakumatt’s banking partners, Diamond Trust Bank (DTB) and Kenya Commercial Bank (KCB), as part of the launch, with both banks issuing prepaid cards to retail customers.

In July 2013, Visa launched the Mi-Card prepaid card in association with Mi-Fone and DTB, targeting smartphone users. In May 2014, the Kenyan Public Transport Industry announcement plans to introduce prepaid cards to pay for transport fares. The Kenyan cards and payments industry is highly mobile-driven, largely through M-Pesa. The business was initially established by DFID, the UK’s Department for International Development, and the Vodafone subsidiary Safaricom. The Central Bank of Kenya (CBK) also played a role in its development. Its strategy has been based on promoting the uptake of mobile-based financial services to the rural, unbanked population, indicating a clear economic rationale for the development of m-payments in Kenya and other countries. M-Pesa has already expanded in Kenya and other east African markets, and is banking on the economies becoming more closely integrated and payment volumes increasing.

Scope

• This report provides a comprehensive analysis of Kenya's cards and payments industry.

• It provides current values for the industry for 2013, and forecast figures for 2018.

• It details the different economic, infrastructural and business drivers affecting the industry.

• It outlines the current regulatory framework in the industry.

• It details the marketing strategies used by various banks and other institutions.

• It profiles the major banks in the industry.

Key Highlights

• In terms of the number of cards in circulation, Kenyan payment cards (including debit, credit and charge cards) registered robust growth during the review period (2009–2013), recording a compound annual growth rate (CAGR) of 26.32% to increasing from 3.8 million cards in 2009 to 9.7 million in 2013. In terms of transaction value, payment cards valued KES1.5 trillion (US$18.5 billion) in 2013, after registering a significant review-period CAGR of 34.40%.

• The average transaction value (ATV) in Kenya was US$49.3 in 2013, which was the fourth-highest among its peer countries. Egypt recorded the highest ATV with US$97.7, followed by Morocco with US$94.3, South Africa with US$54.6, and Nigeria with US$38.4. In terms of card penetration, Kenya recorded 0.22 cards per inhabitant in 2013, while South Africa, Morocco, Nigeria and Egypt recorded respective amounts of 1.25, 0.33, 0.20 and 0.18. In terms of frequency of use, Kenya recorded 35.5 transactions per card in 2013, while South Africa, Morocco, Egypt and Nigeria recorded 38.2, 21.1, 15.7 and 12.0 respectively.

• The Kenyan prepaid market remains in its early stages – fragmented and uneven, but growing quickly despite heavy competition from M-Pesa. To capture the untapped market, banks, card issuers and retailers are launching prepaid card variants. In October 2012, Kenya’s largest retail chain, Nakumatt, launched the Nakumatt Global MasterCard Prepaid card, enabled with contactless technology. MasterCard collaborated with Nakumatt’s banking partners, Diamond Trust Bank (DTB) and Kenya Commercial Bank (KCB), as part of the launch, with both banks issuing prepaid cards to retail customers.

• In July 2013, Visa launched the Mi-Card prepaid card in association with Mi-Fone and DTB, targeting smartphone users. In May 2014, the Kenyan Public Transport Industry announcement plans to introduce prepaid cards to pay for transport fares. The Kenyan cards and payments industry is highly mobile-driven, largely through M-Pesa. The business was initially established by DFID, the UK’s Department for International Development, and Vodafone subsidiary Safaricom. The Central Bank of Kenya (CBK) also played a role in its development. Its strategy has been based on promoting the uptake of mobile-based financial services to the rural, unbanked population, indicating a clear economic rationale for the development of m-payments in Kenya and other countries. M-Pesa has already expanded in Kenya and other east African markets, and is banking on the economies becoming more closely integrated and payment volumes increasing.

Reasons to buy

• Make strategic business decisions using top-level historic and forecast market data related to Kenya's cards and payments industry and each market within it.

• Understand the key market trends and growth opportunities in the industry.

• Assess the competitive dynamics in the industry.

• Gain insights in to the marketing strategies used to sell various card types in Kenya.

• Gain insights into key regulations governing the industry.

Companies mentioned

Equity Bank

The Co-operative Bank of Kenya

Kenya Commercial Bank

Standard Chartered Bank Kenya

Barclays Bank Kenya

Kenawitch

MasterCard

Visa

American Express

Table of Contents

1 Key Facts and Top Events

2 Executive Summary

3 Payment Instruments

3.1 Current Payments Environment

3.2 Alternative Payment Instruments

3.2.1 M-Pesa

3.2.2 PayPal

3.2.3 Skrill

3.2.4 Click2Pay

3.2.5 Zap..

3.2.6 ClickandBuy

3.2.7 eTranzact

3.2.8 Pesapal

3.2.9 iPay.

3.2.10 JamboPay

4 Market Attractiveness and Future Prospects of Cards and Payments

5 Analysis of Cards and Payments Industry Drivers

5.1 Demographic Drivers

5.2 Economic Drivers

5.3 Infrastructure Drivers

5.4 Business Drivers

6 Emerging Consumer Attitudes and Trends

6.1 Market Segmentation and Targeting

6.1.1 Consumer cards

6.1.2 Corporate cards

6.2 Travel Spending

6.2.1 Outbound trips volume and spending

6.2.2 Inbound trips volume and spending

7 Payment Cards

7.1 Payment Cards Instrument Analysis

7.1.1 Number of cards in circulation by card type

7.1.2 Transaction volume by card type

7.1.3 Transaction value by card type

7.1.4 Personal vs commercial cards

8 Debit Cards

8.1 Debit Cards Market Analysis

8.1.1 Number of debit cards in circulation

8.1.2 Debit card transaction volume by channel

8.1.3 Debit card transaction value by channel

8.1.4 Number of debit cards in circulation by scheme

8.1.5 Debit cards transaction value by scheme

8.1.6 Debit cards issuers market shares

8.1.7 Debit cards comparison

9 Credit Cards

9.1 Credit Cards Market Analysis

9.1.1 Number of credit cards in circulation

9.1.2 Credit cards transaction volume by channel

9.1.3 Credit cards transaction value by channel

9.1.4 Number of credit cards in circulation by scheme

9.1.5 Credit cards transaction value by scheme

9.1.6 Credit cards issuers market share

9.1.7 Credit cards comparison

10 Charge Cards

10.1 Charge Cards Market Analysis

10.1.1 Number of charge cards in circulation

10.1.2 Charge cards transaction volume by channel

10.1.3 Charge cards transaction value by channel

11 Commercial Cards

11.1 Commercial Cards Market Analysis

11.1.1 Number of commercial cards in circulation

11.1.2 Commercial cards transaction value

11.1.3 Commercial credit cards

11.1.4 Commercial charge cards

11.1.5 Commercial cards comparison

12 Regulations in the Cards and Payments Industry

12.1 Regulatory Framework

12.2 Anti-Money Laundering (AML)

12.3 Foreign Direct Investment (FDI) Regulations

13 Card Fraud Statistics

13.1 Card Fraud Analysis

14 Card Issuers

14.1 Equity Bank

14.2 Co-operative Bank of Kenya

14.3 Kenya Commercial Bank

14.4 Standard Chartered Bank Kenya

14.5 Barclays Bank Kenya

15 Card Schemes

15.1 Visa

15.2 MasterCard

15.3 American Express

16 Prepaid Cards

16.1 Prepaid Cards Market Analysis

16.1.1 Number of prepaid cards in circulation

16.1.2 Prepaid cards transaction value

17 Appendix

17.1 Tables

17.2 Methodology

17.3 Contact GlobalData

17.4 About GlobalData

17.5 GlobalData’s Services

17.6 Definitions

17.7 Disclaimer

List of Tables

Table 1: Kenya – Key Facts, 2013

Table 2: Kenya – M-Pesa Revenue (KES Billion), FY 2010–2014

Table 3: Regional Benchmarking of Kenyan Payment Cards Instrument, 2013

Table 4: Cards for High-Income Customers

Table 5: Cards for Middle-Income Customers

Table 6: Cards for Frequent Travelers

Table 7: Cards for Corporate Customers

Table 8: Regional Benchmarking of Kenyan Debit Cards, 2013

Table 9: Kenya – Debit Cards Comparison and Key Features

Table 10: Regional Benchmarking of Kenyan Credit Cards, 2013

Table 11: Kenya – Gold Credit Cards Comparison and Key Features

Table 12: Kenya – Premium Credit Cards Comparison and Key Features

Table 13: Regional Benchmarking of Kenyan Charge Cards, 2013

Table 14: Kenya – Commercial Cards Comparison and Key Features

Table 15: Kenya – Market Entry Strategies of Foreign Banks

Table 16: Regional Benchmarking of Kenyan Prepaid Cards, 2013

Table 17: Kenya – Payment Instruments Transaction Value (KES Billion), 2009–2013

Table 18: Kenya – Payment Instruments Transaction Value (US$ Billion), 2009–2013

Table 19: Kenya – Payment Instruments Transaction Volume (Million), 2009–2013

Table 20: Kenya – Number of Cards in Circulation by Card Type (Thousand), 2009–2018

Table 21: Kenya – Transaction Volume by Card Type (Thousand), 2009–2018

Table 22: Kenya – Transaction Value by Card Type (KES Billion), 2009–2018

Table 23: Kenya – Transaction Value by Card Type (US$ Million), 2009–2018

Table 24: Kenya – Personal and Commercial Cards Transaction Value (KES Billion), 2009–2018

Table 25: Kenya – Personal and Commercial Cards Transaction Value (US$ Million), 2009–2018

Table 26: Kenya – Number of Debit Cards in Circulation (Million), 2009–2018

Table 27: Kenya – Debit Cards Total and Average Transaction Value by Channel, 2009–2018

Table 28: Kenya – Debit Cards Total and Average Transaction Value by Channel, 2009–2018

Table 29: Kenya – Number of Debit Cards in Circulation By Scheme (Thousand), 2009–2013

Table 30: Kenya – Debit Cards Transaction Value By Scheme (KES Billion), 2009–2013

Table 31: Kenya – Debit Cards Transaction Value By Scheme (US$ Billion), 2009–2013

Table 32: Kenya – Debit Cards Transaction Value By Issuer (KES Billion), 2009–2013

Table 33: Kenya – Debit Cards Transaction Value By Issuer (US$ Billion), 2009–2013

Table 34: Kenya – Number of Credit Cards in Circulation (Thousand), 2009–2018

Table 35: Kenya – Credit Cards Transaction Volume and Frequency by Channel, 2009–2018

Table 36: Kenya – Credit Cards Total and Average Transaction Value by Channel, 2009–2018

Table 37: Kenya – Credit Cards Total and Average Transaction Value by Channel, 2009–2018

Table 38: Kenya – Number of Credit Cards in Circulation By Scheme (Thousand), 2009–2013

Table 39: Kenya – Credit Cards Transaction Value By Scheme (KES Million), 2009–2013

Table 40: Kenya – Credit Cards Transaction Value By Scheme (US$ Million), 2009–2013

Table 41: Kenya – Credit Cards Transaction Value By Issuer (KES Million), 2009–2013

Table 42: Kenya – Credit Cards Transaction Value By Issuer (US$ Million), 2009–2013

Table 43: Kenya – Number of Charge Cards in Circulation (Thousand), 2009–2018

Table 44: Kenya – Charge Cards Transaction Volume and Frequency by Channel, 2009–2018

Table 45: Kenya – Charge Cards Total and Average Transaction Value by Channel, 2009–2018

Table 46: Kenya – Charge Cards Total and Average Transaction Value by Channel, 2009–2018

Table 47: Kenya – Number of Commercial Cards in Circulation (Thousand), 2009–2018

Table 48: Kenya – Commercial Cards Transaction Value (KES Million), 2009–2018

Table 49: Kenya – Commercial Cards Transaction Value (US$ Million), 2009–2018

Table 50: Kenya – Commercial Credit Cards, 2009–2018

Table 51: Kenya – Commercial Charge Cards, 2009–2018

Table 52: Kenya – Card Fraud (KES Million), 2009–2013

Table 53: Kenya – Card Fraud (US$ Million), 2009–2013

Table 54: Kenya – Number of Prepaid Cards in Circulation (Thousand), 2009–2018

Table 55: Kenya – Prepaid Cards Transaction Value (KES Million), 2009–2018

Table 56: Kenya – Prepaid Cards Transaction Value (US$ Million), 2009–2018

Table 57: Key Definitions

List of Figures

Figure 1: Kenya – Payment Instruments Shares by Transaction Value (%), 2009 and 2013

Figure 2: Kenya – Payment Instruments Shares by Transaction Volume (%), 2009 and 2013

Figure 3: Kenya – Payment Cards Transaction Value and Growth, 2009–2018

Figure 4: Kenya – Total Population (Million) and Proportion Aged Over 65 Years, 2009–2018

Figure 5: Kenya – Nominal GDP (US$ Billion) and Real GDP Growth Rate (%), 2009–2018

Figure 6: Kenya – Volume of ATMs and Penetration, 2009–2018

Figure 7: Kenya – Volume of POS Terminals and Penetration, 2009–2018

Figure 8: Kenya – E-Commerce Value (KES Billion), 2009–2018

Figure 9: Kenya – Cards and Payments Industry Segmentation by Card Type

Figure 10: Kenya – Outbound Trips Volume and Spending, 2009–2018

Figure 11: Kenya – Inbound Trips Volume and Spending, 2009–2018

Figure 12: Kenya – Card Shares In Terms of Numbers in Circulation (%), 2009–2018

Figure 13: Kenya – Card Shares in Terms of Transaction Volume (%), 2009–2018

Figure 14: Kenya – Card Shares in Terms of Transaction Value (%), 2009–2018

Figure 15: Kenya – Personal and Commercial Cards, Transaction Value (KES Billion), 2009–2018

Figure 16: Kenya – Number of Debit Cards in Circulation (Million), 2009–2018

Figure 17: Kenya – Debit Cards Transaction Volume by Channel (Million), 2009–2018

Figure 18: Kenya – Debit Cards Transaction Value by Channel (KES Billion), 2009–2018

Figure 19: Kenya – Debit Cards Scheme Shares in Terms of Number of Cards in Circulation (%), 2013

Figure 20: Kenya – Debit Cards Scheme Market Share in Terms of Transaction Value (%), 2013

Figure 21: Kenya – Debit Cards Issuers’ Market Shares in Terms of Transaction Value (%), 2013

Figure 22: Kenya – Number of Credit Cards in Circulation (Thousand), 2009–2018

Figure 23: Kenya – Credit Cards Transaction Volume by Channel (Thousand), 2009–2018

Figure 24: Kenya – Credit Cards Transaction Value by Channel (KES Billion), 2009–2018

Figure 25: Kenya – Credit Card Scheme Market Shares in Terms of Number of Cards in Circulation (%), 2013

Figure 26: Kenya – Credit Cards Scheme Market Shares in Terms of Transaction Value (%), 2013

Figure 27: Kenya – Credit Cards Issuers’ Market Shares in Terms of Transaction Value (%), 2013

Figure 28: Kenya – Number of Charge Cards in Circulation (Thousand), 2009–2018

Figure 29: Kenya – Charge Cards Transaction Volume by Channel (Thousand), 2009–2018

Figure 30: Kenya – Charge Cards Transaction Value by Channel (KES Million), 2009–2018

Figure 31: Kenya – Number of Commercial Cards in Circulation (Thousand), 2009–2018

Figure 32: Kenya – Commercial Cards Transaction Value (KES Million), 2009–2018

Figure 33: Kenya – Shares of Various Types of Card Fraud in Terms of Transaction Value (%), 2009 and 2013

Figure 34: Kenya – Number of Prepaid Cards in Circulation (Thousand), 2009–2018

Figure 35: Kenya – Prepaid Cards Transaction Value (KES Million), 2009–2018

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