Kenya

Licensing, Authorisation & Market Access

The Draft National Payment System Bill, 2026 was jointly published by the National Treasury and the Central Bank of Kenya on 21-22 September 2026, proposing to repeal the National Payment System Act, 2011 (Cap. 491A) in its entirety and replace it with a new licensing taxonomy. The proposed licence categories include payment initiation service providers, account information service providers, merchant acquirers, electronic wallet providers, electronic money issuers, payment gateways, and payment messaging operators. Notably, the draft Bill brings virtual asset service providers that offer payment services within the payments perimeter for the first time, creating an overlap with the VASP Act, 2025 licensing regime administered separately by the Central Bank of Kenya and the Capital Markets Authority. Public comment on the draft closed on 9 October 2026, following a consultation process that included eleven county-level public forums, reflecting a deliberately broad public-participation exercise ahead of any parliamentary introduction.

A separate compliance-transition provision proposed in the draft would give existing payment companies one year from the Act's eventual effective date to comply with new requirements, including new capital thresholds and trust-account rules. Because the Bill remains in draft form following the close of public comment, neither its effective date nor the resulting one-year transition deadline is yet fixed; the proposal establishes the mechanism but not yet the calendar.

The scale of this proposed overhaul is significant: it is the first comprehensive replacement of Kenya's payment-system licensing architecture in over a decade, and its new taxonomy would apply to both bank and non-bank payment service providers, without differentiating licensing requirements materially between the two categories on the evidence available this cycle.

Outlook

The Bill's movement from public-comment closure toward a parliamentary process is the development to track next. The one-year compliance transition window, when it is eventually anchored to a fixed effective date, will be the key operational deadline for existing Kenyan payment companies to track against new capital and trust-account requirements. Until the Bill is enacted, the current National Payment System Act, 2011 framework remains the binding law.

Licensing, Authorisation & Market Access

Kenya's Treasury and Central Bank of Kenya published a draft National Payment System Bill, 2026 for public comment on 22 September 2026, intended to replace the National Payment System Act 2011. The draft Bill requires any person providing a payment service or operating a payment system to hold a CBK licence. This provision is significant not because licensing itself is new to Kenya's payments market, but because it codifies into primary statute the outcome of the 2022 KENEX v CBK High Court ruling, closing a gap between judicial interpretation and the underlying legislative text that has existed since that ruling.

Alongside the licensing requirement itself, the draft Bill sets minimum capital requirements that vary by payment-service-provider category, ranging from KSh 5 million at the lower end to KSh 250 million at the top end. The KSh 250 million threshold applies specifically to electronic money issuers, marking out that category as facing the highest capital bar under the proposed framework. This tiered structure draws an explicit distinction between categories of payment-service provider, with capital intensity scaling according to the nature and scale of the licensed activity.

The reform is broad in scope: it touches licensing, safeguarding, resilience and open finance in a single draft instrument, which the underlying source material characterises as the most significant proposed overhaul of Kenya's payments regulatory perimeter since the 2011 Act. The draft Bill has not yet been through formal legislative process; the public comment period on the draft Bill and its companion Policy runs to 9 October 2026.

Outlook

The key date is 9 October 2026, when the public comment period closes. Whether the licensing perimeter and the tiered capital requirements survive the comment process intact, or are revised, will determine the shape of market access for both bank and non-bank payment-service providers going into any subsequent legislative stage.

Licensing, Authorisation & Market Access

Kenya's payments market-access regime moved decisively this cycle following High Court confirmation that the Central Bank of Kenya's regulatory jurisdiction under the National Payment System Act, 2011 extends broadly, covering any person engaged in any process in a payment system. This resolves what had been an open interpretive question in CBK's favour, in the KENEX v CBK line of authority, and it forecloses arguments that narrower payment-adjacent activities might sit outside CBK's licensing perimeter. The practical effect is that a wider range of business models touching payment processes in Kenya should now expect to be treated as within CBK's regulatory reach, rather than assuming an activity is unregulated by default.

Alongside this judicial confirmation, market-access terms for non-resident fintechs remain structurally closed to cross-border licence portability: any non-resident entity wishing to provide payment services in Kenya must incorporate locally and obtain a standalone CBK licence, with no mutual recognition extended to payment-service licences issued by other African central banks. This means a PSP licensed in, for example, a neighbouring East African jurisdiction gains no fast-track or passporting benefit when entering the Kenyan market; it must build local corporate and licensing infrastructure from the ground up, on the same basis as a licensee with no prior African regulatory history. This is a probable-confidence finding sourced from advisory-firm commentary rather than direct primary-instrument text, but it is consistent with the structurally national character of NPS Act licensing.

CBK's own primary-source Directory of Authorized Payment Service Providers, current as at 15 May 2026, provides a confirmed, T1-sourced picture of who currently sits within the authorised perimeter: Safaricom (M-Pesa), Airtel Money Kenya, and Cellulant Kenya are named among the authorised providers. This register is a genuine primary-source confirmation point distinct from secondary commentary about market participants, and it should be treated as the authoritative current-state reference for who is licensed, pending any further updates.

Taken together, this cycle's W1a picture is one of judicially-reinforced regulatory breadth combined with continued market-access friction for non-resident entrants: the perimeter is wide, the licensing bar for foreign entrants is high and non-portable, and the confirmed-authorised-provider list remains concentrated among a small number of dominant, already-established players.

Outlook

The question worth tracking into the next cycle is whether the confirmed breadth of CBK's PSP jurisdiction produces visible enforcement activity against previously-unlicensed entities now clearly within scope, or whether it functions primarily as a deterrent against future ambiguous-status market entry. Separately, watch for any regional or bilateral discussion of mutual recognition arrangements for payment licences among African central banks, since the current absence of such recognition is a structural, not incidental, feature of Kenya's regime as it stands.

Licensing, Authorisation & Market Access

Kenya's payment service provider licensing regime, administered by the Central Bank of Kenya under the National Payment System Act 2011 and the National Payment System Regulations 2014, is structured around four categories defined by transaction type and volume rather than a single generic payment-services licence: Electronic Retail PSP, Designated Payment Instrument Issuer, E-Money Issuer, and Small E-Money Issuer. This category-based design means an applicant's obligations, capital expectations and conduct requirements are calibrated to the specific licence category it falls into, rather than a uniform standard applied across all payment providers.

The most material market-access finding this cycle concerns non-resident fintechs. Any non-resident firm seeking to serve Kenyan customers must obtain CBK licensing regardless of whether it maintains a physical presence in Kenya, and must additionally establish a local registered office and appoint a resident compliance officer or agent. CBK does not recognise foreign-issued payment licences as a substitute for local authorisation. This bears with particular weight on the non-bank PI/EMI segment: a bank-affiliated PSP typically already carries a banking charter and local presence, whereas a pure non-bank fintech seeking Kenya-facing distribution faces the local-incorporation and resident-officer requirement as the binding constraint on market entry, with no lighter-touch cross-border passporting route available.

For an operator assessing entry, this licensing structure should be read as a moderate-to-high market-access barrier for non-resident non-bank players specifically, while posing a lower incremental barrier for firms that already hold, or can obtain, a Kenyan banking licence.

Outlook

Whether CBK moves toward any form of streamlined or passported authorisation for non-resident PSPs already licensed in comparable regimes is not indicated by this cycle's evidence; the current posture is one of full local licensing with no recognised foreign-licence equivalence. Continued growth in Kenya's digital-payments market may increase pressure for a more efficient non-resident onboarding pathway, but no such reform is signalled this cycle.

Operational Resilience & Critical Infrastructure

The draft National Payment System Bill, 2026 would grant the Central Bank of Kenya new emergency powers to seize control of failing payment companies and appoint statutory managers for up to 12 months. This is a resolution-and-continuity provision distinct from the Bill's licensing and safeguarding provisions: rather than governing entry into the market or the treatment of customer funds in the ordinary course, it governs what happens when a licensed payment company fails or is at risk of failing.

The up-to-12-month duration for a statutory manager's appointment indicates a resolution window intended to allow either an orderly wind-down or a stabilisation and return to normal operation, rather than an immediate liquidation-only pathway. Granting CBK this direct intervention authority extends its supervisory reach beyond routine licensing and conduct oversight into a more active continuity-management role for the payments sector specifically, distinguishing critical payment infrastructure from ordinary commercial failure in the way the draft framework proposes to treat it.

This provision was published as part of the same 22 September 2026 draft Bill addressed elsewhere in this jurisdiction's coverage, and is subject to the same public comment period closing 9 October 2026.

Outlook

The scope and conditions attached to CBK's proposed emergency intervention powers — including any threshold for their exercise and the specific obligations of an appointed statutory manager — are likely to be a focus of comment during the consultation period. Whether this resolution power survives the legislative process in its current form, and how it interacts with existing insolvency law, is the key open question for this module going forward.

Operational Resilience & Critical Infrastructure

The Central Bank of Kenya has issued a Cybersecurity Guideline for Payment Service Providers, exercising its powers under section 31(2)(b) of the National Payment System Act, 2011. This adds a further operational-resilience obligation layer to the existing payments licensing framework, and it is confirmed via CBK's own payment-systems publication channel, giving it primary-source standing even though the detailed text of the guideline itself was not independently opened and reviewed this cycle. The existence of a dedicated cybersecurity instrument, distinct from general licensing conditions, signals that CBK is treating operational and cyber resilience as a discrete supervisory concern warranting its own guidance document rather than folding it into generic conduct rules.

This development should be read alongside the same cycle's confirmation of CBK's broad PSP jurisdiction under W1a: a regulator whose jurisdiction has just been judicially confirmed as extending to any person engaged in any payment-system process is also, in the same period, formalising a dedicated cybersecurity expectation for that same wide population of regulated entities. The combined signal is one of a regulator consolidating both the scope and the substantive depth of its supervisory reach concurrently.

What remains unconfirmed this cycle is the guideline's specific content: incident-reporting timelines, minimum control standards, third-party risk-management expectations, and any certification or attestation requirements were not evidenced from primary text. PSPs operating in Kenya should treat the guideline's existence as confirmed and its detailed compliance requirements as an open research item pending direct review of the primary document.

Outlook

The key development to track is whether CBK follows the Cybersecurity Guideline's issuance with active supervisory examinations, incident-reporting enforcement, or public guidance clarifying compliance timelines. Given that the guideline was issued under an explicit statutory power (NPS Act s.31(2)(b)) rather than informal advisory channels, it carries the standing of a binding regulatory instrument, and its practical bite will depend on whether CBK follows through with examination or enforcement activity in the coming cycles.

Operational Resilience & Critical Infrastructure

Kenya's core settlement infrastructure is being incrementally modernised. The Kenya Electronic Payment and Settlement System extended its operating hours to 7:00am-7:00pm on business days from July 2025, a bank-side change to the country's high-value interbank settlement rail intended to improve liquidity management and settlement efficiency, part of the broader National Payments Strategy 2022-2025 modernisation programme.

Separately, and at an earlier stage of development, CBK is building a Fast Payment System intended to enable instant transfers across banks, mobile wallets and fintechs. Unlike KEPSS, which is bank-anchored, the Fast Payment System is explicitly conceived to span both bank and non-bank participants; however, its institutional governance framework and the technology-infrastructure options underpinning it are still being established, and no operative system exists this cycle. This is best characterised as an early-stage, UPI-like ambition rather than a near-term deliverable.

Outlook

The resolution of the Fast Payment System's governance and technology-infrastructure questions is the clearest medium-term marker for Kenya's resilience and instant-payments trajectory. Whether the system is built as a CBK-operated utility or delegated to an industry consortium, and whether non-bank participants receive direct access or must connect through sponsoring banks, will determine how far it departs from today's bank-anchored settlement model.

Product Innovation & Market Development

The draft National Payment System Bill, 2026 would require payment providers to build systems for secure customer-data sharing for what the draft terms 'open finance purposes', with the Central Bank of Kenya empowered to mandate such sharing on customer consent. This is a structural product-access provision rather than a conduct or licensing rule: it would create a data-portability obligation across Kenya's payment-services sector, conditioned on customer consent, that does not currently exist under the National Payment System Act 2011.

Separately, but published as part of the same reform package, the companion draft National Payment System Policy, 2026 floats a national instant-payment switch, described as intended to move transactions quickly and cheaply across the entire payment ecosystem regardless of provider. An infrastructure proposal of this kind, if it proceeds, would sit alongside existing private payment rails rather than necessarily replacing them, and its stated aim — moving transactions across the ecosystem regardless of provider — points toward an interoperability objective for Kenya's payments infrastructure.

Both the open-finance data-sharing obligation and the instant-payment-switch proposal are, at this stage, draft provisions subject to the public comment period on the Bill and Policy, which closes 9 October 2026.

Outlook

The open-finance data-sharing mandate and the instant-payment-switch proposal represent two distinct but complementary product-innovation vectors within the same draft reform package. Whether either proceeds beyond the draft stage, and in what form, depends on the outcome of the consultation period closing 9 October 2026 and any subsequent legislative process.

Product Innovation & Market Development

Kenya's digital-payments market is projected to grow at a compound annual growth rate of between 14.1% and 26.16% from 2024 to 2029, reaching approximately USD 24 billion in transaction value by the end of that period, with M-Pesa remaining the anchor product underpinning the projection. This scale of projected growth is significant less for the number itself than for what it implies about CBK's regulatory posture: the central bank has positioned itself as a policy-led enabler of this growth trajectory, investing in settlement-hours extension and Fast Payment System development ahead of continued mobile-money-led expansion, rather than regulating reactively in response to disruption after the fact.

Open banking and related product-innovation frameworks remain at an early stage in Kenya relative to this growth trajectory, though no specific open-banking instrument or timeline was identified in this cycle's evidence base beyond the general policy-enabler characterisation.

Outlook

Whether CBK's enabler posture converts into a formal open-banking or broader product-innovation regulatory framework, as opposed to continued informal policy support for market-led growth, is the development to watch. The scale of projected market growth increases the stakes of getting that framework right, particularly for how non-bank product innovators are treated relative to incumbent mobile-money operators.