Firms seeking to establish electronic money businesses in Kenya could face a Sh250 million capital requirement if a proposed overhaul of the payments sector becomes law, setting the highest financial entry threshold for any category of payment business covered by the new framework.
The proposed requirement is contained in the National Payment System Bill, 2026, prepared by the National Treasury and the Central Bank of Kenya (CBK) as the two institutions seek to replace the existing payments law with a broader framework for the sector.
Under the draft legislation, electronic money issuers would need a minimum capital of Sh250 million to operate. This places them ahead of several other payment businesses whose proposed requirements are considerably lower.
Merchant acquirers, electronic wallet providers, card scheme operators and payment switching and clearing system operators would each be required to maintain at least Sh50 million.
The Bill gives providers already operating in the sector a transition period to comply with the new requirements.
“Upon the commencement of this Act, any person providing payment services shall, within one year of the commencement, comply with the provisions of this Act,” the proposed bill read.
The draft law proposes Sh30 million for money remittance service providers and Sh20 million for payment messaging system operators.
Payment gateways would have a minimum capital requirement of Sh10 million, while payment initiation service providers and account information service providers would each require Sh5 million.
The proposed figures create a large gap between the various areas of the payments industry. An electronic money issuer would need capital equivalent to 50 times the minimum proposed for a payment initiation service provider.
Electronic money issuers are already an important part of Kenya’s digital payments market, with CBK currently authorising mobile financial service providers under the National Payment System framework, including electronic money issuers.
The proposed law would also introduce a clearer licensing structure covering payment service providers and payment system operators.
Businesses intending to operate under multiple licence categories would face an additional capital burden. The Bill proposes that such firms maintain the minimum capital required for their highest-capital licence category and add 50 per cent of the prescribed minimum capital for every additional category.
This means companies providing several types of payment services could need substantially more capital than firms operating under a single licence.
For instance, an electronic money issuer that also seeks a licence in another category carrying a Sh50 million capital requirement would be expected to maintain Sh275 million under the proposed formula.
The capital rules form part of a wider regulatory framework that CBK and Treasury say is intended to strengthen financial stability while supporting competition, innovation, consumer protection and interoperability within the payments sector.
The draft legislation would require payment service providers and payment system operators to use systems capable of working with those of other providers and operators.
This could have implications for how companies develop and run their payment platforms as firms are expected to operate within a more connected payments environment.
“A payment service provider or payment system operator may, with the prior approval of the Central Bank, enter into interoperability arrangements with other payment service providers or payment system operators, and their agents,” the draft Bill reads in part.
The proposed capital structure could also affect investment decisions within the industry, particularly for smaller companies considering entry into the electronic money business.
Such firms would have to raise a substantially larger amount of capital than businesses seeking licences in categories with lower minimum requirements.
Existing payment operators would similarly need to assess their capital position and determine whether they can satisfy the proposed thresholds once the new framework takes effect.
The National Payment System Bill, 2026, has not yet become law and remains subject to public consultation and the legislative process.
CBK said the proposed legislation is intended to replace the existing National Payment System Act and establish a modern framework for regulating Kenya’s evolving payments industry.