Introduction

Kenya's financial regulators are introducing new capital benchmarks for the digital payments sector, signalling a shift toward stricter oversight as the market expands.

What Happened

The National Payment System Bill, 2026, establishes a tiered capital framework, setting minimum thresholds from KES 5 million for basic data services up to KES 250 million for electronic money issuers. The rules also define that only fully paid-up share capital and disclosed reserves qualify as core capital, explicitly excluding borrowed funds, shareholder loans, and contingent commitments.

Why This Matters

The proposed capital thresholds could significantly raise entry barriers for startups, while established banks benefit from existing authorisations and reserves. Yet the bill includes a regulatory sandbox clause allowing innovators to test products without immediate full licensing, potentially preserving growth pathways amid tighter rules.

Key Takeaways

  • Minimum capital ranges from KES 5 million to KES 250 million depending on service type.
  • Borrowed funds, shareholder loans, and contingent capital cannot count toward core capital requirements.
  • Operators holding multiple licence categories must maintain capital for their highest tier plus 50% of the requirement for each secondary category.
  • A regulatory sandbox permits limited product testing without a full licence or upfront capital.
  • Existing banks and state-owned institutions retain structural advantages through pre-existing CBK authorisations.
  • Current payment providers must comply within one year of the law's enactment.

Conclusion

Kenya's proposed capital framework marks a pivotal moment for the country's payments industry, balancing the need for financial stability with the goal of fostering innovation. Stakeholders will monitor how the sandbox operates and whether policymakers adjust thresholds to accommodate emerging fintech models.