Kenya has introduced a draft National Payment System Bill, 2026 that will significantly raise the capital entry barriers for payment companies. The Central Bank of Kenya is proposing mandatory minimum core capital requirements that range from KES 5 million for basic data services to KES 250 million for electronic money issuers. Existing payment providers would be given one year from the law’s enactment to align with the new thresholds, subject to central bank guidelines.
Proposed Capital Requirements by Licence Category
The bill sets differentiated capital thresholds according to the risk and nature of each payment licence category. The highest requirement of KES 250 million, about $1.93 million, applies to Electronic Money Issuer Payment Service Providers, while four other categories including merchant acquirers, electronic wallet providers, card scheme operators and payment switching operators would need KES 50 million. Money remittance providers would require KES 30 million, payment messaging operators KES 20 million, and payment gateways KES 10 million.
Providers operating under more than one licence category would face stacked capital obligations. An operator must hold 100 percent of the highest applicable category requirement plus an additional 50 percent for each secondary licence category. An entity functioning as both an Electronic Money Issuer and an Electronic Wallet Provider would therefore need KES 275 million in core capital, roughly $2.12 million.
Borrowed Funds Excluded from Core Capital
The proposed law narrowly defines what may count as core capital for licensed payment firms. It would include only fully paid-up ordinary share capital and disclosed reserves while excluding shareholder loans, convertible debt, borrowed funds and revaluation reserves. This restriction could make compliance harder for early-stage and bootstrapped fintechs that often depend on debt or convertible instruments.
The exclusion of borrowed funding means applicants must secure genuine equity capital to satisfy the central bank’s requirements. Early-stage companies may therefore face a more demanding fundraising environment before they can obtain full payment licences. The bill further requires licensees to maintain the prescribed minimum capital at all times, reinforcing the ongoing nature of the obligation.
Regulatory Sandbox and Institutional Advantages
To balance higher entry costs, the bill creates a regulatory sandbox for payment innovation. This sandbox would allow firms to live-test new payment products and business models under central bank supervision without first securing a full licence. It is designed to support emerging technologies while giving the regulator an opportunity to assess risks before wider market entry.
Commercial banks, microfinance institutions and state-owned enterprises retain structural advantages under the proposed framework. These institutions would need central bank authorisation rather than a full payment licence, provided they meet existing capital adequacy rules. Their established capital reserves and simplified authorisation process would therefore give them a clear competitive edge over newer fintech applicants seeking to enter the market.
The National Payment System Bill, 2026 represents a significant tightening of Kenya’s financial entry rules for payment companies. By setting substantial capital thresholds and restricting eligible capital to genuine equity, the framework seeks to strengthen stability while potentially reshaping market competition. The inclusion of a regulatory sandbox, however, signals an intent to preserve room for innovation and supervised experimentation.