Introduction

Kenya is overhauling its fintech regulatory framework with the proposed National Payment System Bill, 2026, aiming to modernize oversight of the digital payments sector. The changes come as the Central Bank of Kenya strengthens its role in licensing and monitoring payment service providers, potentially reshaping the investment landscape for startups and backers.

What Happened

The draft bill would require any investor acquiring at least 10% of a licensed payment service provider or payment system operator to secure written approval from the Central Bank of Kenya. Incoming significant shareholders would undergo regulatory vetting, a process already used by traditional banks for major shareholdings. The legislation also introduces minimum capital thresholds—KES 250 million for electronic money issuers and KES 50 million for wallet providers—giving existing operators one year to meet the new standards.

Clause 58 of the bill establishes that a significant change of ownership in a licensed payment firm must receive central bank approval before completion. The measure is part of a broader repeal and replacement of Kenya's current fintech laws, which include the Central Bank of Kenya Act, the National Payment Systems Act, and several 2013 and 2014 regulations.

Why This Matters

For founders, the new approval requirement means a longer window between securing term sheets and receiving funds. A startup running low on cash may need to factor in unpredictable regulatory timelines, potentially forcing earlier fundraising or bridge financing. Agnes Aistleitner of First Circle Capital notes that the added complexity and cost make investing in Kenya less attractive, especially when the market is already dominated by Safaricom and a few large players.

The bill also grants the CBK power to scrutinize smaller shareholdings if there's suspicion of restructuring to avoid certification, and it prohibits mergers or acquisitions of payment service providers without prior written consent. These provisions could affect exit strategies and consolidation plans across the sector.

Key Takeaways

  • Investors acquiring 10% or more of a licensed payment firm must obtain CBK's prior written approval.
  • New minimum capital requirements—KES 250 million for e-money issuers and KES 50 million for wallet providers—will take effect within one year.
  • Founders may face delayed closings, requiring earlier fundraising and more rigorous governance documentation.
  • M&A deals and ownership changes in the payment space will require central bank clearance, complicating exit timelines.
  • While the reforms aim to bring clearer licensing and stronger consumer protections, unpredictable approval processes could deter some backers.

Conclusion

Kenya's fintech reforms signal a shift toward stricter oversight and clearer licensing, which could ultimately improve market stability and consumer trust. However, the immediate effect is likely longer deal timelines and higher compliance costs for startups and investors alike. Founders should anticipate regulatory due diligence as a standard part of the funding process and build buffer time into their cash flow planning. As the bill moves through Parliament, the pace and predictability of CBK approvals will determine whether the framework fuels growth or creates new bottlenecks.