People issued with cheques from rival banks have a reason to smile after the Kenya Bankers Association (KBA) announced that the cheques will now be able to clear within the same day. This is from the initial when people had to wait for at least two working days.
The reduced clearance period follows an upgrade of the Automated Clearing House System (ACH), the platform used by banks for electronic funds transfers and cheques. This will also make it easy for small businesses in Kenya that had to wait for days.
“Currently, local currency cheques clear on a T+1 cycle with value available to the payee one day after the cheque is presented by the paying bank to the ACH,” the Kenya Bankers Association (KBA), the industry lobby, said in a statement on Monday.
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We are pleased to announce that the Automated Clearing House (ACH) has now been upgraded to the ISO 20022 standard. The transition seeks to enhance fraud prevention in the payments system. It is also meant to reduce processing errors, improving turnaround time. pic.twitter.com/ZUTBlCQAO3
— Kenya Bankers Association (KBA) (@KenyaBankers) March 13, 2023
Kenyan banks, in 2013 cut the clearing time for a commercial bank cheque to one day from two to reduce the costs of doing business and to fend off growing competition from mobile phone-based payment systems that operate in real-time.
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The banking system in Kenya has been growing for years, with technology taking the center stage. Many banks have embraced mobile banking but have failed to put customer experience at the center of it. For years, there has been a push for the banks to streamline their systems so that one does not have to wait for 3 days for a cheque to clear.