BGA Kenya Managing Director Dickson Omondi wrote a client update on the changes in Kenya’s payment policy and system.  

Context 

  • Kenya published the draft National Payment System Policy and the National Payment System Bill, 2026, in September and invited public and stakeholder comments. Together, the draft policy and bill seek to repeal existing payment system laws, modernize Kenya’s payments framework by aligning regulation with technological advancements, reducing fragmentation, strengthening consumer protection and improving cross-border integration. Following public consultation and the incorporation of stakeholder feedback, the draft policy will be submitted to the Cabinet for adoption, while the National Payment System Bill will proceed through the legislative process toward enactment into law. 
  • Kenya has long fostered innovation in its financial and technology sectors, including through regulatory sandboxes that have supported advances in digital payments and finance. More recently, the country established a regulatory framework for virtual assets. The current review of the national payment system reflects a broader policy objective: to preserve an enabling environment for innovation while strengthening the government’s role in ensuring stability, security and integrity of the payments ecosystem. It also signals a more prominent role for the government, exercised through the Central Bank of Kenya, in shaping market dynamics through a national instant payment switch. This approach draws on models such as India’s Unified Payments Interface (UPI) and Brazil’s Pix, where public authorities have played a central role in developing and operating foundational payment infrastructure. 

Significance 

  • The central bank will remain responsible for licensing participants in the payments ecosystem, with the National Payment System Bill setting the applicable minimum capital requirements. The bill establishes two broad license types. The first is a payment service provider license, which covers categories for money remittance service providers, merchant acquirers, electronic wallet providers and electronic money issuers. The second is a payment system operator license, covering categories for payment gateway providers, payment messaging system operators, card scheme operators and payment switching and clearing system operators. Licensed banks, microfinance banks, building societies and government-owned enterprises will require authorization, rather than a separate license, to provide payment services or operate a payment system. 
  • A central objective of the proposed policy and regulatory framework is to improve interoperability among payment products and services. The policy identifies fragmentation as a major source of operational inefficiency, high transaction costs and poor service delivery. Drawing on India’s UPI, Kenya proposes an open and interoperable national payment ecosystem that integrates government, banking and fintech platforms. To support this objective, the policy mandates open application programming interfaces, common messaging and data-sharing standards. It combines compliance requirements with incentives designed to facilitate seamless integration across payment options and with regional and global payment systems. 
  • The proposed payments policy calls for the development of a fast payment system, drawing on the experience of the Philippines’ InstaPay and Thailand’s PromptPay, both of which have accelerated digital payment adoption and advanced financial inclusion. Establishing such a national instant payment switch would deepen the government’s role in the payments ecosystem and reshape competition across domestic payment rails, potentially lowering transaction costs and placing pressure on existing business models. At the same time, it could create new opportunities for private-sector partnerships, particularly in cross-border payments. 

Implications 

  • Companies should develop and align existing products and services to comply with these requirements, rather than rely on business models built around exclusivity. The proposed framework also seeks to strengthen market integrity and promote fair competition through measures including a market-conduct supervision framework and shared data standards. Companies should note this in their risk registers, given comparable efforts by the government to step up competition regulation targeting digital platforms. 
  • Companies should also prepare for regulatory compliance while using the consultation period to shape a framework aligned with best practices in growing the financial and payments sector. Although the consultation period closed October 9, the legislative process will provide stakeholders with another opportunity to submit input. 
  • Businesses should build early models on the commercial impact of this new layer of competition in domestic rails while exploring opportunities for future partnerships, particularly in cross-border payments and global markets. 

We will continue to keep you updated on developments in Kenya. If you have any comments or questions, please contact BGA Kenya Managing Director Dickson Omondi at domondi@bowergroupasia.com. 

Best regards, 

BGA Kenya Team

A small ginko leaf

Managing Director, Kenya

Dickson is a leading expert on the political economy, business and regulatory affairs of countries across Africa, with more than 25 years of experience in political party development, legislative strengthening, governmental accountability, public policy and civic engagement. He is a strategic leader and a firm believer in the continent’s economic and political potential, reinforced by his experience traveling and working in more than 16 countries in sub-Saharan Africa. Dickson works alongside multinational companies, governments and civil society to find mutually beneficial solutions for all stakeholders. His team’s strategic advocacy across a broad range of sectors helps organizations overcome challenges and ... Read More