The Central Bank of Kenya (CBK) and the National Treasury have launched a major regulatory overhaul targeting the digital payments ecosystem, releasing the draft National Payment System Bill 2026 for public consideration and parliamentary review.

Under the proposed legislation, which seeks to replace the existing National Payment System Act, payment service providers (PSPs) face strict new licensing conditions, including minimum capital requirements ranging from Ksh 5 million ($38,600) up to Ksh 250 million (~$1.93 million) depending on their operational category.

The draft bill sets a single licensing framework covering mobile money operators, payment gateways, electronic wallet providers, card processors, remittance firms, and merchant acquirers. Minimum paid-up capital requirements are broken down across key service categories:

  • Electronic Money Issuers (e.g., M-Pesa, Airtel Money): KSh 250 million (~$1.93 million)
  • Merchant Acquirers & Card Scheme Operators: KSh 50 million (~$386,000)
  • Payment Switching & Clearing Operators: KSh 50 million (~$386,000)
  • Money Remittance Providers: KSh 30 million (~$231,000)
  • Payment Messaging Operators: KSh 20 million (~$154,000)
  • Payment Gateways: KSh 10 million (~$77,000)
  • Payment Initiation & Account Information Providers: KSh 5 million (~$38,600)

For fintechs operating across multiple license categories, the bill stipulates that companies must hold the full capital requirement for their highest category, plus 50% of the capital requirement for each additional tier.

To insulate customer funds from operational collapse, electronic money issuers and wallet providers will be mandated to hold all customer deposits in trust accounts separate from company funds.

Furthermore, to prevent systemic risk, no single commercial bank may hold more than KSh 500 million ($3.86 million) or 25% of a payment firm’s total trust deposits, whichever is higher.

The bill equips the CBK with broader regulatory oversight, including mandatory fit-and-proper evaluations for senior executives, directors, and any shareholder holding a 10% stake or higher. Shareholders who fail vetting face an immediate loss of voting rights and must divest below the 10% threshold.

In cases where a firm experiences distress or violates regulatory standards, the regulator will have emergency powers to:

  • Take direct control of company assets for up to 90 days.
  • Appoint statutory managers to run operations for up to 12 months (extendable by an additional year).
  • Issue daily non-compliance fines up to KSh 100,000, with administrative penalties reaching KSh 30 million ($231,000) for repeat corporate violations.

The proposed law mandates system interoperability across payment providers and agents, giving CBK explicit powers to require firms to integrate with rival platforms.

If enacted into law, existing payment firms operating in Kenya will have a 12-month grace period from the commencement date to comply with the new capital standards and operational requirements.