In 2015 Financial Sector Deepening (FSD) Kenya released a study looking at key barriers and opportunities affecting the uptake of credit and debit card transactions in the Kenyan economy. 

The study, produced in partnership with Visa and MasterCard found that while use of plastic has grown substantially over the years, Kenyans are yet to fully adapt to the culture of using credit and debit cards, especially compared with other markets around the world. 

Some of the identified barriers for wider use include lack of awareness of the full value of cards, misconceptions on cost implications and mistrust of the system, with respondents listing fear of card fraud or system failure.

Today, ten years after the crucial study, the use of debit, credit and prepaid charge cards in the country still remains largely subdued, particularly in contrast to other fintech solutions including mobile money and fintech apps.

According to data from the Central Bank of Kenya, CBK, the number of card transactions at ATMs and POS machines stood at 3.6 million during the month of June 2025, a 14 per cent drop compared to June last year.

This comes even as service providers continue to launch new service offerings and invest in technological infrastructure to improve both the customer and merchant experience. 

This raises the question of why the numbers still remain low and what industry players and regulators can do to boost uptake. 

According to the Value of Acceptance report released by Visa earlier this year, more SMEs are gravitating towards digital payments, citing reduced fraud risk and increased transparency, with a high satisfaction rate of 69 percent among SMEs accepting digital payments. 

The survey further found 4 out of 10 SMEs in Kenya already utilize fintech and a significant majority, 68 percent, are planning to invest in new digital payment technologies. Nearly one in four cash-only SMEs indicated they planned to acquire POS systems for their businesses. 

Kenyan SMEs are aware of the strategic importance of cashless payments in growing their businesses. Increased revenue collection, higher levels of customer satisfaction and reduced operational risks were all cited by firms surveyed as tangible benefits of going cashless. 

More importantly, business leaders acknowledge that digital transactions easily generate records that contain valuable data that can be used to monitor and plan one’s product or service offering and facilitate access to finance through innovative use of scoring models.

This last advantage is particularly heightened when it comes to card-based payments. Studies have shown that increased use of card-based payments contributes to economic growth by cutting on operation costs, improved business efficiency and provision of strategic data analytics.

One of the challenges facing SMEs today, particularly those largely operating on cash basis, is record keeping, which affects the ability of business leaders to keep track of their cash flow, making it difficult for the banks to assess them for financing.

This has prompted service providers to develop new offerings that address this shortcoming and provide SMEs with scalable payment solutions. Recently Absa Bank Kenya launched the Absa Business Credit Card tailored at the unique needs of Micro, Small and Medium Enterprises, MSMEs. 

The Absa Business Credit Card provides businesses with the opportunity to optimise their cash flows with flexible interest-free credit options of up to 50 days on payables. 

The card also comes with a digital card management dashboard, access to business assistance platforms like Google Workspace and marketing tools to bolster their product or service offering. 

More than just a payment option, the business credit card serves as a smart working capital tool that allows MSMES to pay suppliers instantly while selling inventory before repaying.

The wide-scale adoption of such tools has the potential of fueling growth in the sector particularly coming at a time when demand for credit and capital mobilisation is at an all-time high. 

According to the CBK, the value of MSMEs deposits held by commercial banks has almost doubled in recent years from Sh577 billion in 2020 to Sh956 billion last year and now account for 16.5 percent of total customer deposits. 

Financial service providers should tap into the opportunity to ensure that more of this value flows through card transactions to ensure that businesses get the chance to enhance their business operations and grow their value propositions to their respective clients. 

The writer, Erastus Muthura, is the Head of SME Business at Absa Bank Kenya.