The Role of Remittance Service Providers in Kenya

In our article titled, Insights into Exchange Rates and Foreign Exchange Regulations in Kenya” we highlighted various remittance providers licensed by the Central Bank of Kenya.

In this article, we will focus on the roles of these Remittance Service Providers and how they partner with banks in Kenya to offer remittance services.

What is Remittance Service Providers

A Remittance Service Provider (RSPs) is an entity that receives cash or cash equivalent in a professional capacity or on a commercial basis and causes the cash or cash equivalent to be payable to a third party elsewhere. RSPs are distinct from banks. They accept instructions from customers to transfer money domestically or internationally. Oftentimes, these providers engage reliable agents approved by the Central Bank, to provide the services on their behalf.

Many global RSPs such as Azimo, Equity Direct, MoneyGram, PoaPay, Sendwave, Skrill, Simbapay, Western Union, WorldRemit, Xoom, and Xendpay have partnered with major Kenyan commercial banks as well as mobile network operators to allow for swift, reliable, and convenient transfer of funds from the diaspora to recipients in Kenya.

Additionally, these banks have introduced Diaspora Current Accounts, enabling Kenyan migrants to deposit funds through MSPs as savings or for investments.

Remittance transactions are civic, in that they involve the transfer of money from one individual to another. However, this characteristic also makes them high-risk, as the source of funds may often be unknown, therefore requiring strict adherence to anti money laundering regulations as highlighted in our previous article.

Non-Bank Remittance Options for Kenyan Diaspora

Aside from bank-affiliated services, Kenyan diaspora members have alternative remittance options like the Mukuru Group, which allows direct money transfers to relatives in Kenya from countries including Uganda, Eswatini, and Tanzania through platforms like M-Pesa.

M-Pesa: A Leading Mobile Money Service Provider

Safaricom PLC’s M-Pesa stands out as one of the most successful mobile money services globally. It provides access to financial services for millions worldwide through mobile phones, bank partnerships, and Western Union locations, hence facilitating seamless transfer of funds to recipients in Kenya.

Collaboration between Bank and Remittance Service Providers

The relationship between banks and remittance money service providers (MSP) is recognized under Regulation 25 of the Central Bank of Kenya Money Remittance Regulations 2013. According to the regulations, before an MSP engages a bank for collaboration, the two must first create a contract, which is then submitted to the Central Bank of Kenya for approval alongside any other information the CBK may require.

The regulations place responsibility for all actions or omissions of the agent/bank upon the MSP, such that, if the agent fails to fulfill their duties properly, makes mistakes, or engages in any misconduct while conducting remittance transactions on behalf of the MSP, the MS|P will be held accountable for these actions.

When collaborating with a bank or any agent to provide this service, the contract between the MSP and the bank must contain the following information: –

  1. a statement that the money remittance operator is wholly responsible for and liable for all actions or omissions of the agent.
  2. measures to mitigate risks associated with agent business including limits, customer transactions, cash management, cash security, security of agent premises and insurance policies;
  3. specific services to be rendered by the agent;
  4. the rights, expectations, responsibilities and liabilities of both parties;
  5. a statement that the Bank shall have free, unfettered and timely access to the internal systems, documents, reports, records, staff and premises of the agents in so far as money remittance business is concerned and shall exercise such powers as it may consider necessary;
  6. appropriate policies and procedures to detect, prevent, report or otherwise deal with incidences of money laundering ;
  7. responsibilities of the agent to deliver supporting transaction documents; a statement that all information or data that the agent collects in relation to agency money remittance services, whether from the customers, the money remittance operator or from other sources, is the property of the money remittance operator; adequate oversight safeguards for the money remittance operator to address instances of non-compliance by the agent with the stipulated obligations;
  8. prohibition from charging the customer any fees other than the fees agreed upon between the money remittance operator and the customer at the initiation of the transaction;
  9. business hours of the agent;
  10. suitable limits on cash holding by the agent and also limits on individual customer payments and receipts;
  11. confidentiality of customer and user information;
  12. remuneration for the agent;
  13. a transition clause on the rights and obligations of the money remittance operator and the agent upon termination or cessation of the agency contract; and
  14. a requirement for the money remittance operator’s prior approval to be obtained when an agent is seeking to transfer the agency business.

This information is required to manage and reduce the risks of the MSP’s services being used as channels for crimes, such as money laundering and terrorist financing.

Considerations when selecting a suitable Remittance Service Provider

Just like any other service provider, anyone seeking to remit funds must select the most suitable RSP by considering several factors:

a. Cost

The costs of remitting money vary with different RSPs. Before remitting money, one may consider comparing the fees charged by the different RSPs. The World Bank maintains a website known as Remittance Prices Worldwide (RPW) (accessible through  which serves 367 country corridors worldwide, from 48 remittance-sending countries to 105 receiving countries.

For instance, for the Kenyan remittance market, Remittance Prices Worldwide provides price comparison information for six incoming corridors i.e. Canada to Kenya; Rwanda to Kenya; South Africa to Kenya; Tanzania to Kenya; the United Kingdom to Kenya; and the United States to Kenya).

The African Institute for Remittances (AIR) also maintains a regional price comparison tool called Send Money Africa. (Accessible through Send Money Africa provides data on the cost of sending relatively small amounts of money from selected countries worldwide to several African countries, as well as within the African continent.

While it may be burdensome to compare the cost of sending money from different parts of the world, it doesn’t harm to save a few coins.

b. Exchange Rates

Aside from the costs of remitting funds from the diaspora, it is important to check the exchange rates offered by RSPs. Some providers offer competitive rates, while others may have higher margins. It is best to choose an RSP that provides favorable exchange rates.

c. Transfer Speed

Consider the speed at which the RSP can deliver funds to the recipient. Some RSPs offer instant or same-day transfers, while others may take several days to complete the transaction. You may want to choose a RSP that aligns with your needs.

d. Transfer Limit

It is worthwhile to consider the transfer limits imposed by the MSP. Different MSPs have different amounts that can be transferred in any given transaction. Some may permit split transfers while others may not. It is therefore important to select the most preferred MSP that suits your needs.

e. Reliability and Reputation

Finally, for any service provider, reputation and reliability is a basic requirement. You don’t want to lose your money with an unknown entity. It is therefore important to research the reliability and reputation of the RSP, by looking up reviews and feedback from other customers to gauge their satisfaction and experiences with the RSP.

These and other factors will assist diaspora families to make an informed decision when choosing a suitable RSP that meets their needs for cost-effectiveness, reliability, speed, and convenience.

For more on this topic, please reach out to Lilian Opondo at or


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