Kenya Overhauls Payment Regulations as Central Bank Targets Mobile Money and Fintechs

The draft National Payment System Bill, 2026, jointly developed by the National Treasury and the Central Bank of Kenya, seeks to replace the fifteen-year-old law currently governing how money moves across the country. If enacted, the legislation will grant the Central Bank of Kenya significantly stronger oversight powers over mobile money operators, digital wallets, payment gateways, and other financial technology firms. Furthermore, the proposals introduce tougher regulatory mandates regarding minimum capital holdings, the protection of customer funds, and data governance standards within the digital finance sector.

The legislative framework establishes a new licensing structure comprising approximately ten distinct categories for payment service providers and payment system operators. Minimum capital requirements span from five million shillings for lighter services, such as payment initiation and account information services, up to two50 million shillings for electronic money issuers, which includes major mobile money platforms. Providers holding multiple licences must meet the highest capital threshold alongside half of each additional category. Existing operators will be granted a twelve-month compliance window once the law officially takes effect across the market.

Consumer fund protection forms a central pillar of the proposed statutory changes. Electronic money issuers and digital wallet providers will be mandated to keep all customer funds in ring-fenced trust accounts at licensed commercial banks, entirely separate from corporate operating funds. Restrictions will also govern the maximum balances held in any single bank to mitigate systemic risk. Additionally, the draft introduces an open finance framework requiring secure data sharing with licensed third parties upon customer consent, paired with mandatory interoperability rules designed to dismantle closed financial ecosystems.

Regulatory intervention powers within the Central Bank of Kenya are substantially broadened under the draft legislation. Officials will gain authority to inspect premises with or without notice, remove corporate officers, restrict specific business operations, and appoint statutory managers to take control of non-compliant payment firms in severe circumstances. The regulatory net is explicitly extended to include virtual asset service providers offering payment services, while transparency rules across all transaction types are tightened to preserve overall stability within the rapidly expanding digital payments landscape.

Why This Matters

Regulatory restructuring of this magnitude directly impacts operational models for dominant market participants and emerging fintech entrants alike. By raising capital thresholds, the framework intentionally introduces high barriers to entry for smaller or less capitalized entities, which could reshape market consolidation patterns. At the same time, mandating ring-fenced trust accounts and bank diversification directly addresses systemic liquidity risks, offering a higher degree of structural protection for everyday users who rely extensively on electronic money networks for daily economic activity.

Open finance mandates and interoperability requirements alter the competitive dynamics between traditional banks and agile technology platforms. Enforcing data sharing upon consumer request lays the groundwork for collaborative product development, yet it also introduces intricate compliance challenges regarding data governance and cybersecurity resilience. For policy makers and regulatory authorities, expanding direct supervisory reach into virtual asset service providers signals a concerted effort to capture perimeter activities within formal monetary oversight.

Opportunities

• Fintech Operators: Prepare for compliance audits and align internal accounting structures to meet tiered capital requirements and ring-fenced trust account mandates within the transition window.
• Financial Institutions: Partner with electronic money issuers and digital wallet providers seeking compliant commercial bank partnerships for segregated customer trust accounts.
• Compliance Integrators: Provide secure data-sharing infrastructure and open finance architecture to help payment service providers meet new interoperability and consent requirements.

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