![[Kenya] Digital credit provider Tala disbursed Sh240 billion in loans in eight years](https://theafricanbusiness.com/wp-content/uploads/2023/02/TALA-APP-360x180.jpg "[Kenya] Digital credit provider Tala disbursed Sh240 billion in loans in eight years 19")
Banking fraud fears, poor network keep card payments low
Customer fears over fraud and poor network connectivity have hindered the use of bank cards for merchant transactions in Kenya, the Central Bank of Kenya (CBK) has said.
The monetary regulator said in its national payments strategy released last month that the cost of terminals and lower acceptance by merchants as opposed to cash and mobile payments have also held back the growth of card usage.
At the end of 2021, there were 48,968 point of sale (POS) terminals in use in the country, up from 16,604 in 2011.
The number of mobile money Lipa na Mpesa merchants in the meantime stood at 387,000 as at September 2021, data from Safaricom shows, having jumped from 122,000 in March 2013.
“Usage of cards in Kenya is still relatively low and there is still significant room for growth if key issues would be addressed such as poor network of POS terminals, cost of POS terminals and acceptance by merchants, and negative perception among customers due to incidents of fraud,” said CBK.
“Also, mobile money transactions –particularly merchant payments– may have become a substitute for card payments.”
Card users face the risk of skimming when unscrupulous merchants swipe their cards, exposing their accounts to fraudsters, hence the general reluctance among some to use them for payments.
Mobile transactions also carry an advantage of convenience over cards due to the wider acceptance, and the fact that they are not linked to a particular bank like is the case with cards.
CBK’s observations have now put the onus on banks to strengthen their POS networks in order to compete with the preference for mobile money in payments.
Lenders have in the past decade put in stronger security measures on their cards to curb fraud, including phasing out magnetic stripe cards —that were prone to skimming— and replacing them with ones using chip-and-pin technology that is more secure.
