Quality of Service and Consumer Experience Forum

1. QUALITY OF SERVICE AND CONSUMER EXPERIENCE FORUM. (23rd to 25th November 2015) Laico Regency, Nairobi. Kenya

2. KENYA Area: 582,650 sq km Population: 43 million GDP per Capita: USD 994.31 Currency: Kenya Shilling Legal System: English Common Law system No. of mobile money accounts: 20 million. Mobile Phone penetration: 79.2 % in 2014 Internet usage / penetration: 47.3 % in 2014

3. AGENDA • Consumer Rights • Consumer Protection • Structure of Payment Systems • Financial Inclusion • Regulatory and Legislative Developments • Q & A.

4. CONSUMER RIGHTS In order to safeguard consumer interest, six consumer rights were initially envisioned by consumer rights activists of the West, namely: • Right to Safety • Right to Information • Right to Choice • Right to be Heard • Right to Redress • Right to consumer education.

5. CONSUMER PROTECTION • Consumer protectionlaws are designed; • to ensure the rights of consumers as well as fair trade, competition and accurate information in the marketplace. • provide additional protection for those most vulnerable in society. Consumer protection law is an area in law that seeks to regulate private law relationships between individual consumers and the businesses. It covers product liability, privacy rights, unfair business practices, fraud, misrepresentation, and other consumer/business interactions.

6. PAYMENT SYSTEMS STRUCTURE • Innovation in the financial services sector positively contributes to an efficient and effective payment, clearing and settlement system. In addition, innovation contributes to improved financial access which is a key attribute of the financial inclusion agenda. At an advanced level, innovation ultimately leads to an enriching customer experience that result in the satisfaction of the public good. • The payment system architecture is subdivided into 4 broad areas: • KEPSS (Kenya Electronic Payment and Settlement System) • ACH (Automated Clearing House) • Payment Card Infrastructure • Mobile Payment Platform

7. Payment Systems Structure Classified into 2 in based on the value and volume throughput;

8. KENYA ELECTRONIC PAYMENT AND SETTLEMENT SYSTEM (KEPSS) Kenya’s only systemic significant payment system used for large value and time critical payment instructions. It is a Real Time Gross Settlement system (RTGS). It has grown overtime due to public usage. It is safe and secure    

9. AUTOMATED CLEARING HOUSE (ACH) This is used for clearing Electronic Fund Transfer instructions (EFT) and cheques. Various modernization initiatives have been implemented; • Value capping 2009, • Cheque truncation 2012enabled T+1 clearing cycle

10. PAYMENT CARD INDUSTRY (PCI) This industry continues to register growth with mixed fortunes. To reduce fraud, the industry is using EMV compliant infrastructure – cards, ATMs and POS.

11. MOBILE MONEY TRANSFER SERVICES Mobile Financial Services has continued to grow since inception and has revolutionised the Kenyan economy. Partnerships have been forged in all industries with Mobile payment service providers ranging from Banking to Public Transport sectors. Kenya has over 25.4 million mobile money transfer accounts transacting Kes. 6.5 Billion daily undertaking over 2.5 million transactions per day using the mobile money transfer platform. An average of KShs. 180 (USD 2.0) Billion per month are transacted through this platform.

12. FINANCIAL INCLUSION Source: Financial Access Surveys: 2006, 2009 & 2013 • An increase to 67 percent of Kenyans can access financial services . • Only about 7.8 percent are served by informal financial services. • A reduction to 25 percent of the population are still excluded.

13. REGULATORY AND LEGISLATIVE DEVELOPMENTS • Mandate of the Central Bank of Kenya Act under Section 4A(1)(d) ‘formulate and implement such policies as best promote the establishment, regulation and supervision of efficient and effective payment, clearing and settlement systems” • National Payments System Act, 2011 • National Payments System Regulations 2014 Key Areas within the NPS legal framework provided for in interest of customers in mind: • Designation of payment systems or instrument. • Authorisation of payment service provider. • Prohibition of issuance of payment instruments. • Consumer protection • Settlement of disputes.

14. CONSUMER PROTECTION To avoid exploitation of consumers • Regulation 35: • (1) A payment service provider shall provide— (a) a clear and understandable description of the services ……… the rates, terms, conditions and charges for such services and shall publish such information and display it prominently at all points of service; • (5) All electronic retail transactions shall be executed in real time— Provided that where an electronic retail transaction cannot be completed in real time, the payment service provider shall notify: (a) the payer of the delay of the execution; and (b) the customer of the period within which the transaction shall be completed or cancelled. • (6) A payment service provider may not charge the customer for fulfillment of its disclosure and information obligations under these Regulations.

15. Information to consumers Protection from misrepresentation of facts Regulation 37: A payment service provider shall ensure that its advertisements— (a) are precise and easily understood; (b) are not misleading to consumers; and (c )are comprehensive enough to properly inform consumers of the main features and conditions of the product.

16. Customer care Regulation 38. A payment service provider shall— (a) within a period of six months after commencing the provision of payment services, establish a customer care system within which its customers can make inquiries and complaints concerning its services; (b) prior to establishing a customer care system under paragraph (a)— (i) provide adequate means for customers to file complaints; and (ii) address such complaints within a reasonable period from receipt of the complaint; (c) put in place a clear mechanism to address consumer complaints due to loss of funds through fraudulent means; and (d) provide, at all points of service, easily understood information about their complaint handling procedure.

17. Safety of Customer Information • Regulation 42: (1) A payment service provider, its agents and cash merchants shall keep the information in respect of services provided to any customer confidential in accordance with the Act. • Regulation 29: (1) A payment service provider shall— (a) use systems which are able to provide an accurate and fully accessible audit trail of all transactions from the origin of the electronic transfer payments to its finality; and (b) keep records of every electronic transfer the payment service provider processes for a period of at least seven years.

18. STANDARDS • Regulation 15: (2) A contract for the provision of retail cash services entered into between a payment service provider and an agent or a cash merchant shall not be exclusive. • Regulation 16: (1) A payment service provider who intends to enlist a new agent or cash merchant, shall at least fourteen days prior to commencement of such agency, notify the Bank. (2) A notification under paragraph (1) shall be accompanied by— (e) a risk assessment report of the provision of cash services through agents or cash merchants including the control measures applied to mitigate the risks; • Regulation 21: (1) A payment service provider shall use systems capable of becoming interoperable with other payment systems in the country and internationally. (2) A payment service provider may amongst other arrangement, enter into interoperable arrangements.

19. SERVICE QUALITY The Kenya Information and Communication Act (Part VI A )provides the legal recognition to electronic transactions. Some of the key areas that it deals with are: • facilitate electronic transactions by ensuring the use of reliable electronic records; • facilitate electronic commerce and eliminate barriers to electronic commerce such as those resulting from uncertainties over writing and signature requirements; • promote public confidence in the integrity and reliability of electronic records and electronic transactions; • foster the development of electronic commerce through the use of electronic signatures to lend authenticity and integrity to correspondence in any electronic medium; • promote and facilitate efficient delivery of public sector services by means of reliable electronic records; and • develop sound frameworks to minimize the incidence of forged electronic records and fraud in electronic commerce and other electronic transactions ( Cyber Crimes)

21. Q&A Thank You …“Asanteni”