Payment service providers and system operators will now be required to keep five times as much capital as the minimum capital requirement is raised to Sh250 million.
The National Payments Bill, 2026, sponsored by the Treasury proposes to expand licence categories under payment service providers (PSPs) and payment service operators, acknowledging the evolution of the payments landscape since 2014 when the respective laws were last set.
Under the PSPs licence, payment initiation service providers and account information service providers will be required to have Sh5 million in minimum capital.
Electronic money issuers will be obligated to hold the highest minimum capital at Sh250 million from Sh50 million previously.
Electronic money issuers are entities like mobile network operators or non-bank firms which convert cash into digital money.
Payment system operators including payment gateways, messaging system operators, card scheme operators and switching and clearing system operators must keep between Sh20 million and 50 million minimum capital.
Previously, the scope of payment service providers was narrow and covered only four license categories; electronic retail payment service providers, designated payment instrument issuers, e-money issuers and small e-money issuers.
The players, who are regulated by the Central Bank of Kenya (CBK) have until now been required to keep between Sh1 million and Sh20 million in core capital.
The proposed changes seek to address gaps and challenges identified in Kenya’s national payment system including the legal framework, limited interoperability across payment platforms, insufficient payment system resilience, data fragmentation and real-time visibility, cybersecurity and emerging technology risks.
‘Kenya’s National Payment System continues to evolve rapidly, supported by technological innovation, digital financial services and increasing adoption of electronic payments,’ reads the draft National Payments Policy published alongside the payments bill.
‘However, gaps and challenges remain in the legal and regulatory framework, interoperability, resilience, data and information sharing, cybersecurity, consumer protection, participation in payment infrastructure, cross-border payments, financial literacy, governance and coordination.’
The Central Bank of Kenya (CBK) has currently authorised 40 payment service providers including Safaricom Plc and Airtel Money Kenya Limited who are both approved to issue, process, store, send and facilitate mobile money payments.
The pair is also approved to provide platforms that facilitate the processing of payments on behalf of merchants.
Other approved PSPs include Web Tribe Limited, Cellulant Kenya Limited, Pesapal Limited, Craft Silicon, Direct Pay and Paystack Payments.
The National Payment System (NPS) forms the backbone of Kenya’s financial sector and facilitates the smooth, secure and efficient transfer of funds across the economy.
The payment system has undergone significant transformation, driven primarily by mobile money, fintech innovation and progressive regulation.
In the 1990s, payments in Kenya relied heavily on cash and cheques, with slow and inefficient manual clearing processes.
At the end of the decade in 1998, the Nairobi Automated Clearing House was automated, serving as a catalyst for the modernisation and laying the groundwork for faster and more reliable electronic clearing of cheques and electronic funds transfers.
CBK introduced the Kenya Electronic Payment and Settlement System, a real-time gross settlement system that facilitates high-value interbank transfers.
The launch of mobile money services in 2007 served to revolutionise retail payments by enabling secure, affordable, and accessible digital transactions.
Most recently, Kenya has witnessed rapid digital transformation of its NPS, characterised by mobile-money interoperability, regional payment integration, and expansion of payment solutions, including the integration of digital payment systems in government platforms such as eCitizen.
‘The current phase of NPS reforms focuses on enhancing interoperability, security and regional integration, building on CBK’s National Payment Strategy (2022-2025) , which promoted the principles of trust, security, usefulness, choice and innovation,’ the draft NPS policy adds.
‘As the eco-system continues to mature, the country is now pursuing a modern, unified and adaptive framework for payments to ensure a resilient, interoperable, and inclusive national payment system that enables real-time, secure and affordable transactions while promoting innovation, regional payment integration and consumer protection.’
CBK holds the primary responsibility of regulating and supervising payment systems and PSPs including the authorisation for entities that carry on payment services.
The CBK also holds powers to issue directives and impose supervisory requirements and provide the legal basis for oversight of retail and wholesale payment infrastructure.