Kenyas Cards and Payments Industry: Emerging Opportunities, Trends, Size, Drivers, Strategies, Products and Competitive Landscape

Published: Nov, 2014 | Pages: 86 | Publisher: Timetric
Industry: Financial Services | Report Format: Electronic (PDF)

Synopsis
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% 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.

Summary
The report provides top-level market analysis, information and insights on Kenya's cards and payments industry, including:

• Current and forecast values for each category of Kenya's cards and payments industry, including debit cards, credit cards, charge cards and prepaid cards
• Comprehensive analysis of the industry’s market attractiveness and future growth areas
• Analysis of various market drivers and regulations governing Kenya's cards and payments industry
• Detailed analysis of the marketing strategies adopted for selling debit, credit, charge and prepaid cards used by banks and other institutions in the market
• Comprehensive analysis of consumer attitudes and buying preferences for cards
• The competitive landscape of Kenya's cards and payments industry

Scope
• This report provides a comprehensive analysis of Kenya's cards and payments industry.
• It provides current values for Kenya's cards and payments industry for 2013, and forecast figures for 2018.
• It details the different economic, infrastructural and business drivers affecting Kenya's cards and payments 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 Kenya's cards and payments industry.

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 Kenya's cards and payments industry.
• Assess the competitive dynamics in Kenya's cards and payments industry.
• Gain insights in to the marketing strategies used to sell various card types in Kenya.
• Gain insights into key regulations governing Kenya's cards and payments 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.

 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 Timetric
17.4 About Timetric
17.5 Timetric’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