The National Treasury and the Central Bank of Kenya (CBK) have proposed a major overhaul of the country’s payment system, with new rules targeting payment service providers, fintechs and digital payment platforms.

🇰🇪 Breaking It Down

The proposals are contained in the draft National Payment System Bill, 2026, which seeks to repeal and replace the National Payment System Act, Cap. 491A, enacted in 2011.

Under the proposed framework, payment service providers and payment system operators would face stricter requirements on consumer protection, data security and the handling of customer information.

The Bill would also require payment providers to give customers clear and timely information about their products and services, including fees, charges, risks, limitations and terms and conditions.

📌 What You Need to Know

The Bill introduces a licensing system requiring companies that operate payment systems or provide payment services to acquire a CBK license.

While banks, microfinance banks, and building societies do not need a new license, they must obtain formal authorization and comply with equivalent capital adequacy standards.

On the other hand, electronic money issuers and digital wallet providers must hold all client balances in ring-fenced trust accounts at licensed commercial banks, completely separated from their own corporate operating funds.

At the same time, no single bank is allowed to hold more than Ksh500 million or 25 per cent of a provider's total trust funds, whichever is higher, to minimize systemic risk of bank failure.

The Bill grants the Central Bank sweeping regulatory intervention and enforcement capabilities, including direct control and statutory management.

If providers fail to comply with the rules, the Bill proposes heavy penalties of up to Ksh20 million, escalating to Ksh30 million for repeat offenses, along with daily penalties of up to Ksh100,000.

📰 Source: Kenyans.co.ke