Kenya Proposes Landmark Payment Bill to Empower Central Bank on Open Finance

Kenya is moving to reshape its digital payments ecosystem as the National Treasury and the Central Bank of Kenya publish the draft National Payment System Policy and the National Payment System Bill, 2026. The proposed legislation repeals the older National Payment System Act of 2011 to introduce open banking and open finance principles into one of the continent's most active digital economies. Under the provisions of the new Bill, the Central Bank of Kenya gains the authority to compel payment service providers and system operators to share customer data securely with licensed third parties, provided that the customer grants explicit consent. Comments on the draft legislation close on October 9, 2026.

The structural changes introduced by the draft Bill establish distinct operational duties for market participants while creating new paths for third-party operators. Clause 29 and Clause 28 compel providers to run systems capable of secure data sharing and rival system interoperability upon regulatory order. The First Schedule introduces new licence categories, including payment initiation service providers and account information service providers. These entities can serve customers and pull multi-account data without holding customer funds, distinguishing them from electronic money issuers and wallet providers who must maintain trust accounts at regulated banking institutions. This regulatory distinction arrives as established giants like Safaricom's M-PESA scale massive transaction volumes, and international rivals pursue capital expansion.

Regulatory mechanics remain subject to further definition as the text moves through the legislative process. The Bill outlines penalties for non-compliance, including substantial fines for firms and individual officers, alongside a one-year transition window for existing providers. However, crucial operational details such as data scope, cost conditions, and specific API standards are delegated to future regulations that require careful reconciliation within the text. Industry leaders, including Ali Hussein Kassim of the Association of FinTechs in Kenya, have noted that while the legislation provides a foundational legal base, the operational model depends heavily on precise rules governing granular consent, cybersecurity, liability, and standardized application programming interfaces.

Why This Matters

The introduction of formal open finance legislation in Kenya carries profound implications for market competition, consumer protection, and the broader digital financial architecture. By allowing licensed fintechs to access customer data and initiate payments without holding underlying deposits, the framework challenges traditional barriers to entry that have long protected dominant mobile money ecosystems. This shift encourages alternative service providers to innovate around established networks, potentially lowering transaction friction and broadening financial inclusion for underserved demographics across the region.

At the same time, the centralization of regulatory authority through the Central Bank of Kenya introduces complex compliance requirements that will test both incumbent institutions and new market entrants. The legal mandate for interoperability and data sharing requires robust data sovereignty safeguards, transparent consent mechanisms, and resilient cybersecurity standards to protect consumer trust. As regulators and policymakers refine the underlying rules, the ultimate success of the framework will depend on balancing open competition with systemic financial stability and clear consumer redress pathways.

Opportunities

• Fintech Operators: Build advanced account aggregation and payment initiation platforms designed to integrate seamlessly with incumbent mobile money and banking systems.
• Financial Institutions: Upgrade legacy core banking infrastructure to support secure, standardized application programming interfaces for third-party data sharing.
• Legal and Compliance Consultants: Advise market participants on interpreting new capital requirements, licensing categories, and regulatory compliance obligations.
• Technology Integrators: Deploy secure data middleware and interoperability solutions to help payment providers meet central bank mandates efficiently.

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