Benson Kathuri And Kimathi Njoka
3 July 2007
Nairobi — Stockbrokers can now accept card payments for shares bought by retail investors.
The move is expected to increase access to the Nairobi Stock Exchange (NSE) by overseas retail investors.
A partnership between Barclays Bank and NSE members will see stockbrokers and investment banks signed up as Barclaycard merchants, authorised to run cards on point-of-sale terminals.
"The partnership will offer investors purchasing shares on the stock market an alternative payment option, which is secure and faster," said Barclays Bank managing director, Mr Adan Mohamed during signing of the agreement in Nairobi on Monday.
"We see synergies in this partnership that are beneficial to both Barclaycard and the NSE members with the potential for Barclaycard to tap into the bourse's Sh94 billion turnover," he said.
Kenyans living overseas will benefit from the partnership by using their cards to make purchases through the brokers.
"Kenyans in the Diaspora had to channel the money for investment in the stock market through relatives but sometimes the money never went to the intended purpose," said Mr Chris Mwebesa, the NSE chief executive.
During the function, also attended by stockbrokers, Mwebesa said the partnership would help to improve efficiency at the bourse and increase turnover.
"The partnership also presents the stockbrokerage fraternity with an opportunity to offer investors with a payment option with lower handling expenses compared to the traditional payment through cash and cheques," Mwebesa said.
He said credit card usage was easier - if costlier - than securing a loan for the purchase of shares, especially during initial public offers when demand was overwhelming.
Card issuing banks will give cardholders a credit ceiling to facilitate the holder to buy shares without applying for a loan.
"Barclaycard does not only process and accept cards issued by Barclaycard but also transactions made on cards by other banks operating major schemes, including Visa, MasterCard, JCB and American Express," Mohamed said.
Some stockbrokers, however, have expressed concern that card usage in the country was too low and the arrangement might not benefit majority of investors.
Standard Investment Bank Executive Director, Mr Job Kihumba, said unless the cards were accessible to low income earners, activity at the NSE would not be enhanced.
"Most people still believe in cash transactions and nothing else can be money," said Kihumba, who added that the associated costs of card usage might discourage some users.
Mohamed said the bank had embarked on an intense public education campaign to increase the users from the current 1.3 million.
The bank is now targeting anybody earning over Sh10,000 monthly to apply a credit card, down from Sh22,000 required a year ago.
The move to rope in more credit card users can be attributed to the quest to increase lending as the battle for customers and new business lines in the banking sector hots up.
Barclays has also embarked on a Sh2 billion expansion programme that will culminate in the opening of at least 40 branches, especially in the rural areas, by the end of the year.
The growth plan is set to double the number of cash machines and branch network by end of next year. Currently it has a network of 74 branches.
The new additions to the network include Ngong', Mbale, Garrissa, Narok, Eastleigh, Ongata Rongai, Webuye, Kilifi, River Road, Mombasa Port and Kitui branches.
Others planned include Narok, Githunguri, Kawangware, Limuru, Buruburu, Githurai, Gikomba, Maua, Kapsabet, Kapenguria, Kabarnet, Wundanyi, Kerugoya, Isiolo and Webuye.
Also on the cards are accounts with lower minimum balances and tailor-made loans for the small and micro enterprise sector. The bank has also waived the need for references from other customers and employers to ease the process of potential customers wishing to open accounts.
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