Choice Microfinance Bank has partnered with digital payments platform WayaWaya to expand access to banking services for businesses, allowing merchants to receive, hold and make payments through a single digital platform.

The partnership will integrate Choice Bank's banking infrastructure into WayaWaya's platform through an Application Programming Interface (API), enabling businesses to access regulated banking services without having to move funds between multiple financial service providers.

The deal targets WayaWaya's existing network of approximately 32,000 businesses, which could now transact larger amounts and use their accounts to pay suppliers, settle salaries and receive customer payments.

WayaWaya founder Teddy Ogallo said the partnership would address limitations that have restricted the amount of money merchants can collect and settle through its platform, particularly because of the absence of direct banking infrastructure.

He said the company's existing cross-border payments model had imposed transaction and settlement limitations on merchants, forcing them to transfer funds to other platforms to complete payments.

"Once the money comes into the ecosystem, it can be kept within WayaWaya and used to pay suppliers and even salaries, rather than the current setup where we have to move it to a different platform," said Ogallo.

He added that transferring funds between platforms exposes businesses to additional transaction charges and creates fragmented payment processes.

The integration with Choice Bank will allow merchants to access banking services within the WayaWaya ecosystem, including foreign exchange, international transfers, utility payments and domestic bank transfers.

Ogallo said the company expects the partnership to accelerate its expansion, with the potential to double or triple the number of businesses it serves.

Choice Bank's chief commercial officer Patrick Russell said the partnership would help address gaps in merchant payment systems by giving small and medium-sized businesses access to banking infrastructure beyond mobile money networks.

He said businesses need more options for collecting and making payments, including bank transfers, multi-currency accounts and foreign exchange services.

"Merchant payments in Kenya are very important, especially at the SME level. We need to provide them with better collection capabilities, not just relying on mobile network frameworks, but also banking capabilities," said Russell.

Under the arrangement, WayaWaya will retain the direct relationship with customers through its digital platform, while Choice Bank will provide the regulated banking infrastructure, hold customer deposits and undertake know-your-customer (KYC) checks.

Russell said customers would effectively hold bank accounts with Choice, even as they access the services through WayaWaya's technology platform.

This means customer deposits will be held by a Central Bank of Kenya-licensed institution and covered by the Kenya Deposit Insurance Corporation (KDIC), subject to applicable deposit insurance limits and conditions.

The partnership comes as financial technology firms increasingly seek partnerships with licensed banks to expand their services without having to independently build and maintain banking infrastructure.