Kenya's National Treasury and Central Bank have published a draft National Payment System Bill, 2026, which aims to repeal the 2011 National Payment System Act. The bill introduces tiered minimum capital requirements by licence category. Electronic money issuers would need KSh250 million, approximately $1.93 million. Other licence categories, including wallet providers, card schemes, merchant acquirers, and switching operators, would require lower capital. The bill seeks to strengthen the country's payment system and protect consumers.
The proposed capital requirements vary by licence category. Wallet providers, card schemes, merchant acquirers, and switching operators would need KSh50 million, about $386,000. Remittance providers would require KSh30 million, approximately $232,000. Data-focused account information and payment initiation providers would need KSh5 million, about $39,000. Firms holding multiple licences must meet the full requirement for their highest category plus half of each additional one.
Existing payment service providers would have one year from the bill's enactment to comply with the new capital requirements. The Central Bank of Kenya has invited public comments on the bill, which close on October 9. The bank aims to create a more robust payment system, allowing for greater competition and innovation. The bill also mandates interoperability and introduces open finance, requiring incumbents to share customer data with licensed third parties.
The bill's provisions have sparked concerns about access to capital for early-stage companies. The requirement excludes shareholder loans, convertible debt, and other borrowed funds from counting as core capital. This could disadvantage Kenyan and East African founders, who often rely on convertible notes, founder and family loans, and venture debt to finance their businesses.
Critics argue that the bill's capital requirements could favour well-funded foreign companies over local entrepreneurs. A subsidiary of a global payments group may easily meet the capital requirements, while a local company may struggle to do so. This could lead to a concentration of licences among incumbents and banks, rather than promoting competition and innovation.
Tanzania, a neighbouring country, is watching Kenya's regulatory developments closely. Tanzania's own payment regulations date from 2015, and regional founders are increasingly comparing Nairobi and Dar es Salaam as potential licence destinations. The outcome of Kenya's consultation process could have implications for the broader East African region.
The author of the opinion piece, Amne Suedi, argues that the aim is not to weaken the Central Bank but to create a capital rule that protects consumers without favouring certain entrants over others. She urges founders, investors, and their advisers to participate in the consultation process before October 9 to ensure that the bill promotes competition and innovation in the payment sector.
Key points
- The bill introduces tiered minimum capital requirements for payment service providers in Kenya.
- The proposed capital requirements vary by licence category, ranging from KSh5 million to KSh250 million.
- The bill's provisions have sparked concerns about access to capital for early-stage companies and the potential impact on local entrepreneurs.
