I had the pleasure of growing up in Kenya in the 1970s, so every time I return, it always feels special. The city, Nairobi, has, of course, changed a lot and when I send photos back to the office some in the team remark that it looks like Las Vegas at night.

In many markets that I get to travel to, the banks are desperately keen to drive digital experiences in the issuing and acquiring space. The same ambitions lie with the Kenyan banks – at least in words – but when it comes to action, it is always M-Pesa, other mobile money operators and fintechs that are driving the digitalisation agenda of payments locally.

The banks are increasingly having to slug it out over a small market share, which, in broad terms, is declining mainly because others are innovating first and staying customer relevant.  Where the banks should have been tokenising their cards first or offering virtual card issuance, the one that launched the proposition first was M-Pesa.

M-Pesa’s influence on the card-issuing market in Kenya is profound, driving changes in consumer behaviour, fostering competition and promoting innovations that integrate mobile money with traditional banking products.

Nairobi is a hotbed of fintech; last year it saw by far the greatest amount of funding in Africa going to its start-ups.  Conference organisers have jumped on the bandwagon. It feels that every other month there is a new payments conference being organised in Nairobi.

The city itself, with five million people, is almost on a par with Addis Ababa and Cape Town and ranks about the 11^th most populous in Africa, whilst the country’s total population of around 57 million makes it the 7^th largest by population.

Kenya’s economy is on a transformative journey. Central to this is Kenya Vision 2030, a comprehensive development blueprint launched in 2008, which seeks to elevate the country into a newly industrialised, middle-income nation. The vision aims for an average GDP growth rate of 10% per annum and focuses on three main pillars: economic, social and political development.  Heading into the final phases – and leaving the blip of the pandemic years out of the equation – Kenya has managed to achieve rapid double digit annual growth.

The main flagship projects under Kenya Vision 2030 are aimed at stimulating job creation among Micro, Small and Medium Enterprises, whilst driving a digital economy by expanding access to technology and fostering innovation.  Key themes include:

Nairobi is not only the political centre but also the financial heartbeat of East Africa. The establishment of the Nairobi International Financial Centre (NIFC) attracts both domestic and international investments, enhancing Nairobi’s position as a regional financial hub.  Backed by Strathmore University with its academic prowess and Innovation Labs, the city is already an attractive destination for businesses and investors alike.

The main sectors fuelling Nairobi’s economic expansion are:

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As of 2025, Kenya’s 46 commercial banks, despite lagging in payment innovation to others, remain robust. Major players include Equity Bank, Kenya Commercial Bank, and NCBA Bank, which dominate the market.

Given the ever-present competition from M-Pesa, the banks seek to differentiate by enhancing customer experience through their digital banking solutions and personalised services, whilst continuing to streamline operations and reduce costs. Other actions being taken include:

However, the banks still have a lifeline as they continue to benefit from the fast economic and population growth. The key trends are still positive with an upward trend in debit and credit card usage as consumers shift towards cashless transactions and banks launch new products that cater to various demographics, including youth-focused cards with unique benefits. Some of the trends include:

Of the above, it is the prepaid card growth that is evolving the fastest. The key developments being:

Merchant volumes accepting card payments are also increasing rapidly, driven by technological advancements, consumer demand for convenience, and fintech collaborations help to integrate payment solutions to support both online and offline transactions.  Key trends are:

: with frequent outages, unreliable and slow network connectivity impacting transaction processing, particularly for acquirers. Continuous downtime in Kenya affects customer trust and operational efficiency.

 The rise in digital transactions has led to increased fraud. Lenient penalties for fraudsters and inadequate enforcement of regulations contribute to a challenging environment. There is a need for stronger legal frameworks to mitigate fraud effectively.

Need for Collaboration: to address common challenges within the card ecosystem, such as high operational costs and regulatory compliance issues.

Specifically for bank-card issuers; they also face several challenges that are hindering the growth and efficiency of their operations. The main ones being:

1. Promotion of Financial Inclusion: M-Pesa has played a crucial role in enhancing financial inclusion in Kenya, increasing access to financial services by up to 82.9% by 2019. This expanded access brought more customers into the formal financial system, leading to increased demand for banking products, including cards. As more people become financially literate and engaged with digital payments, they are more likely to adopt debit and credit cards alongside their M-Pesa accounts.
2. Shift in Consumer Preferences: The M-Pesa convenience and accessibility have shifted preferences towards cashless transactions. Many users view M-Pesa as a primary means of conducting financial transactions, which can limit the growth of traditional card usage. However, as M-Pesa integrates with card services (such as its partnership with Visa for virtual cards), it creates a hybrid model.
3. Competition and Collaboration: Banks are increasingly collaborating with M-Pesa to provide integrated services that combine mobile money with traditional banking products. For instance, M-Pesa has enabled users to link their bank accounts and access credit facilities through its platform, which indirectly promotes card usage as part of a broader financial services package.
4. Impact on Merchant Acquiring: M-Pesa transformed the landscape by providing merchants with an easy way of accepting payments without the need for traditional card infrastructure. This led to a rise in cashless transactions at retail points. The low M-Pesa transaction fees also pressure banks to reconsider their fee structures for card transactions.
5. Technological Integration: The introduction of features like virtual cards linked directly to M-Pesa accounts allows users to make online purchases seamlessly, thereby bridging the gap between mobile money and traditional card payments.

Author: Norman Frankel, Chief Growth Officer, Stanchion Payments Solutions