Kenya Plans a New Payments Rulebook. The Hard Part Is Who Controls the Rail.

𝐾𝑒𝑛𝑦𝑎’𝑠 𝑝𝑟𝑜𝑝𝑜𝑠𝑒𝑑 𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑃𝑎𝑦𝑚𝑒𝑛𝑡 𝑆𝑦𝑠𝑡𝑒𝑚 𝑟𝑒𝑓𝑜𝑟𝑚𝑠 𝑤𝑜𝑢𝑙𝑑 𝑟𝑒𝑞𝑢𝑖𝑟𝑒 𝑏𝑎𝑛𝑘𝑠, 𝑚𝑜𝑏𝑖𝑙𝑒-𝑚𝑜𝑛𝑒𝑦 𝑜𝑝𝑒𝑟𝑎𝑡𝑜𝑟𝑠 𝑎𝑛𝑑 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑐𝑜𝑚𝑝𝑎𝑛𝑖𝑒𝑠 𝑡𝑜 𝑐𝑜𝑛𝑛𝑒𝑐𝑡, 𝑖𝑛𝑡𝑟𝑜𝑑𝑢𝑐𝑒 𝑜𝑝𝑒𝑛-𝑓𝑖𝑛𝑎𝑛𝑐𝑒 𝑠𝑒𝑟𝑣𝑖𝑐𝑒𝑠, 𝑠𝑡𝑟𝑒𝑛𝑔𝑡ℎ𝑒𝑛 𝑝𝑟𝑜𝑡𝑒𝑐𝑡𝑖𝑜𝑛 𝑜𝑓 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟 𝑓𝑢𝑛𝑑𝑠 𝑎𝑛𝑑 𝑐𝑟𝑒𝑎𝑡𝑒 𝑎 𝑛𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑖𝑛𝑠𝑡𝑎𝑛𝑡-𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑠𝑤𝑖𝑡𝑐ℎ. 𝑇ℎ𝑒 𝑟𝑒𝑓𝑜𝑟𝑚 𝑐𝑜𝑚𝑒𝑠 𝑎𝑓𝑡𝑒𝑟 𝐾𝑒𝑛𝑦𝑎𝑛𝑠 𝑚𝑎𝑑𝑒 2.72 𝑏𝑖𝑙𝑙𝑖𝑜𝑛 𝑚𝑜𝑏𝑖𝑙𝑒-𝑚𝑜𝑛𝑒𝑦 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛𝑠 𝑤𝑜𝑟𝑡ℎ 𝐾𝑆ℎ8.24 𝑡𝑟𝑖𝑙𝑙𝑖𝑜𝑛 𝑖𝑛 2025. 𝑌𝑒𝑡 𝑡ℎ𝑒 𝑑𝑟𝑎𝑓𝑡𝑠 𝑑𝑜 𝑛𝑜𝑡 𝑑𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑒 𝑤ℎ𝑜 𝑤𝑖𝑙𝑙 𝑜𝑤𝑛 𝑎𝑛𝑑 𝑜𝑝𝑒𝑟𝑎𝑡𝑒 𝑡ℎ𝑒 𝑠𝑤𝑖𝑡𝑐ℎ, 𝑤ℎ𝑖𝑐ℎ 𝑝𝑟𝑜𝑣𝑖𝑑𝑒𝑟𝑠 𝑚𝑎𝑦 𝑎𝑐𝑐𝑒𝑠𝑠 𝑖𝑡 𝑑𝑖𝑟𝑒𝑐𝑡𝑙𝑦, 𝑤ℎ𝑎𝑡 𝑡ℎ𝑒𝑦 𝑤𝑖𝑙𝑙 𝑝𝑎𝑦 𝑜𝑟 𝑤ℎ𝑜 𝑐𝑎𝑟𝑟𝑖𝑒𝑠 𝑡ℎ𝑒 𝑙𝑜𝑠𝑠 𝑤ℎ𝑒𝑛 𝑡𝑟𝑎𝑛𝑠𝑎𝑐𝑡𝑖𝑜𝑛𝑠 𝑓𝑎𝑖𝑙. 𝑇𝑒𝑐ℎ𝑛𝑖𝑐𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑜𝑝𝑒𝑟𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑤𝑖𝑙𝑙 𝑛𝑜𝑡 𝑝𝑟𝑜𝑑𝑢𝑐𝑒 𝑔𝑒𝑛𝑢𝑖𝑛𝑒 𝑐𝑜𝑚𝑝𝑒𝑡𝑖𝑡𝑖𝑜𝑛 𝑖𝑓 𝑑𝑜𝑚𝑖𝑛𝑎𝑛𝑡 𝑖𝑛𝑠𝑡𝑖𝑡𝑢𝑡𝑖𝑜𝑛𝑠 𝑐𝑎𝑛 𝑖𝑚𝑝𝑜𝑠𝑒 ℎ𝑖𝑔ℎ 𝑐ℎ𝑎𝑟𝑔𝑒𝑠, 𝑠𝑙𝑜𝑤 𝑠𝑒𝑡𝑡𝑙𝑒𝑚𝑒𝑛𝑡 𝑜𝑟 𝑟𝑒𝑠𝑡𝑟𝑖𝑐𝑡𝑖𝑣𝑒 𝑐𝑜𝑛𝑡𝑟𝑎𝑐𝑡𝑠. 𝐾𝑒𝑛𝑦𝑎 ℎ𝑎𝑠 𝑎𝑙𝑟𝑒𝑎𝑑𝑦 𝑑𝑖𝑔𝑖𝑡𝑖𝑠𝑒𝑑 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠. 𝐼𝑡𝑠 𝑛𝑒𝑥𝑡 𝑐ℎ𝑎𝑙𝑙𝑒𝑛𝑔𝑒 𝑖𝑠 𝑡𝑜 𝑒𝑛𝑠𝑢𝑟𝑒 𝑡ℎ𝑒 𝑖𝑛𝑓𝑟𝑎𝑠𝑡𝑟𝑢𝑐𝑡𝑢𝑟𝑒 𝑏𝑒𝑛𝑒𝑎𝑡ℎ 𝑡ℎ𝑒𝑚 𝑖𝑠 𝑓𝑎𝑖𝑟𝑙𝑦 𝑝𝑟𝑖𝑐𝑒𝑑, 𝑠𝑒𝑐𝑢𝑟𝑒𝑙𝑦 𝑔𝑜𝑣𝑒𝑟𝑛𝑒𝑑 𝑎𝑛𝑑 𝑜𝑝𝑒𝑛 𝑡𝑜 𝑒𝑣𝑒𝑟𝑦 𝑞𝑢𝑎𝑙𝑖𝑓𝑖𝑒𝑑 𝑝𝑟𝑜𝑣𝑖𝑑𝑒𝑟. 𝑃𝑢𝑏𝑙𝑖𝑐 𝑠𝑢𝑏𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 𝑟𝑒𝑚𝑎𝑖𝑛 𝑜𝑝𝑒𝑛 𝑢𝑛𝑡𝑖𝑙 9 𝑂𝑐𝑡𝑜𝑏𝑒𝑟 2026.

Kenya became synonymous with digital payments before it built a common national retail network. M-PESA put money inside an ordinary mobile phone. Banks followed customers onto apps and short-code menus. Fintechs connected merchants, lenders, billers and remittance companies to private systems. Commercial invention, bilateral agreements and regulatory changes built the market rather than one shared national design.

Kenyans made 2.72 billion mobile-money transactions worth KSh8.24 trillion in 2025. That was equivalent to about 47 per cent of the country’s KSh17.58 trillion nominal GDP. Payment turnover counts money each time it moves while GDP measures production, so the comparison describes scale rather than economic contribution. By June 2026, the Communications Authority counted 54 million subscriptions and 568,463 agents. The Central Bank recorded 94.35 million accounts and 575,400 active agents a month later. These are accounts and subscriptions, not unique people.

A second system moves fewer, higher-value transactions. The Kenya Electronic Payment and Settlement System, or KEPSS, processed 9.8 million messages worth KSh46.6 trillion in the financial year to June 2025. It moves money between commercial-bank accounts at the Central Bank. In July 2026, it settled almost KSh4.77 trillion. Payment cards produced 6.26 million point-of-sale transactions worth KSh27.1 billion that month. Kenya’s economy depends on networks operating at different speeds, under different owners and at different prices.

The Central Bank of Kenya's 2026 Policy says the legal framework has fallen behind technology and the market. Connections remain incomplete outside the advances already made in mobile money. Non-bank payment companies reach the systems that calculate obligations and move final funds through commercial banks. Cross-border payments remain expensive in important corridors. Cyber risk and dependence on outside technology suppliers have grown with usage.

The National Payment System Bill, 2026 would repeal the 2011 law, identify new payment activities, assign licence and capital requirements, require connected systems, introduce open-finance services, strengthen rules for customer money and expand Central Bank supervision. The Policy proposes shared digital infrastructure and a national instant-payment switch. A switch sends an instruction to the correct recipient institution and helps calculate what each participant must settle.

Both documents remain drafts. Public participation is open, with written submissions due by 9 October 2026. Establishing the national switch and activating the new duties would require enacted legislation, regulations and infrastructure. Those later decisions will determine which institutions connect, what they pay and who controls the network beneath their transactions.

Kenya has already digitised payments. It is now deciding whether every qualified provider will receive practical and fairly priced access to the systems that make those payments possible.

The system Kenya built.

Kenya’s payments economy contains several layers. The Nairobi Automated Clearing House processes cheques and electronic transfers in batches and calculates what participating banks owe one another. KEPSS, launched in 2005 and owned and operated by the Central Bank, handles large or urgent transfers one at a time. The final funds move between accounts that commercial banks hold at the Central Bank rather than depending on another private institution’s promise to pay.

KEPSS adopted the ISO 20022 messaging standard in October 2024. The standard gives institutions a common format for sending payment information such as the payer, beneficiary, purpose and status of a transaction. Since July 2025, KEPSS has operated from 7 in the morning to 7 in the evening on working days. The longer hours support faster bank payments but do not provide a continuously available retail service.

Commercial banks connect customers through accounts, cards, transfers, agents and apps. PesaLink offers near-instant transfers between participating banks. In a card transaction, the issuing bank provides the card, the acquiring institution serves the merchant and the card scheme carries the instruction. Payment gateways let a business accept several methods through one connection. Platforms such as eCitizen concentrate government payments.

Mobile money occupies a different position. A transfer between customers of the same operator can be recorded inside that operator’s account system. The electronic balance is backed by pooled money held in trust rather than by a bank deposit in the customer’s name. A transfer to another mobile network uses an agreement between providers. Their systems exchange the instruction, confirm the balances and settle the resulting obligation. A cross-border transfer may add foreign-exchange conversion, an overseas collection partner or correspondent banks.

The phone hides those routes. A KSh1,000 instruction may reach the recipient in seconds in each case, but the route determines the fee, the institution holding the money during the transfer, the procedure after failure and the company that receives the complaint. The same Send button can conceal several different markets.

Kenya has already connected important parts of them. Person-to-person transfers between mobile-money providers began in 2018. Till interoperability followed in April 2022 and paybill interoperability in July of that year. Interoperability allows a customer of one participating provider to pay or send money to a customer of another without withdrawing cash or opening a second wallet. The 2014 Regulations require a provider’s system to be capable of becoming interoperable and allow providers to make connection agreements.

The reach of those networks remains unequal. Safaricom held 88.8 percent of mobile-money transfer subscriptions at the end of June 2026. Competition law does not treat market share alone as proof of abuse, but scale gives the largest network practical advantages through its agents, merchants, distribution and established customer habits. A smaller provider can obtain a technical connection and still struggle to offer the same reach or price.

Charges can also move from one side of a transaction to the other. Precursor’s September 2026 tariff baseline found that a KSh10,000 M-PESA Buy Goods payment carried no published fee for the customer making the payment, while the merchant’s published receipt charge reached KSh55. The customer sees a free payment, but the merchant pays to accept it. The merchant can absorb the charge, recover it through prices, discourage that payment method or incur another fee when moving the money. A common technical connection will not reduce such costs unless access, switching and settlement charges are also addressed.

Kenya has connected many mobile-money payments without creating one neutral route across wallets, bank accounts, merchants and government platforms. The 2026 drafts would make broader connection a legal duty and a government infrastructure programme.

The 2026 regulatory reset.

The current Act already allows the Central Bank to designate payment systems, authorise providers, inspect operations, issue directions and protect final settlement. The 2014 Regulations govern agents, electronic money, trust accounts, customer disclosures and payment execution. The Bill keeps that foundation but identifies more businesses sitting between a payer and payee.

The draft separates payment service providers from payment system operators. It names payment initiation and account information as open-finance services. It creates distinct categories for merchant acquiring, electronic wallets, electronic-money issuance and remittance. Gateways, messaging services, card schemes, and switching and clearing businesses receive operator categories. A company performing several of these functions would need permission for each activity.

The Third Schedule assigns a minimum capital amount to each category. Account-information and payment-initiation providers would each require KSh5 million. A gateway would need KSh10 million, a messaging operator KSh20 million and a remittance provider KSh30 million. A merchant acquirer, electronic-wallet provider, card scheme or switching and clearing operator would need KSh50 million. An electronic-money issuer would need KSh250 million. A company seeking several licences would hold the highest applicable amount plus half of the minimum for every additional category.

The schedule charges more capital to companies holding customer value than to those transmitting data. A fintech combining account information, initiation, a wallet and merchant acceptance would add requirements even when services share controls. Capital can absorb loss but cannot replace secure software, separated customer funds or a recovery plan. Each threshold should correspond to the risk covered.

Directors, senior officers, trustees and owners with at least 10 percent would undergo checks on their competence, integrity and financial standing. The Central Bank could inspect a business, issue directions, suspend or revoke its licence, remove unsuitable office holders, intervene in management and appoint a statutory manager. Mergers, acquisitions, outsourcing and major ownership changes would require prior approval. Providers would have to report customer-fund losses, reconciliation failures, serious outages, cyber breaches, insolvency and important supplier failures.

Supervising businesses that can interrupt commerce without taking bank deposits will increase the Central Bank’s workload. The Bill requires immediate reporting of a material event but leaves the threshold undefined. Regulations should separate a short interruption affecting one service from a nationwide outage and prioritise events capable of harming customers or spreading through the system.

The Bill also contains internal numbering errors. Its definition of a payment service provider refers to licensing under section 6, although the licensing requirement appears in section 5. Section 21 refers to an exemption under section 10, while that exemption appears in section 9. Sections 50 to 52 refer to information obtained under sections 47 and 48, although section 47 only defines terms and the relevant collection powers appear later. Section 70 refers to penalties under section 64, while the administrative penalties appear in section 71. The Fifth Schedule cites section 70 even though the consequential amendments appear in section 77. These appear to be drafting mistakes, but a regulator, provider or court needs the enacted law to identify the intended duty, exemption and penalty without reconstructing Parliament’s intention.

What the 2026 Bill changes.

The current framework authorises payment providers broadly and requires their systems to be capable of connecting with others. The draft names a larger set of payment and infrastructure activities, assigns minimum capital to each category, requires providers and operators to use interoperable systems, creates account-information and payment-initiation services, expands incident reporting and gives the Central Bank stronger intervention powers. The Policy, not the Bill, proposes the national instant-payment switch. The drafts do not identify its owner, participation rules or prices although we can easily assume CBK will take ownership.

Important operating rules would still be written after enactment. Regulations would determine fees, service standards, open-finance connections, cybersecurity duties, outsourcing controls, agent rules and parts of consumer protection. The Bill identifies who needs a licence. The terms on which those companies compete remain for later regulations.

Interoperability becomes a rule of the market

Section 28 of the draft Bill would impose a stronger obligation than the 2014 Regulations. Every payment service provider and payment system operator would have to use systems that are interoperable with those used by other providers, operators and their agents. The Central Bank could order an institution to enter an interoperability arrangement. The Policy adds common technical standards, secure software connections and common message formats.

Section 28 does not specify which systems must connect for which transactions. A wallet can reasonably be required to receive transfers from another wallet. A bank account may need to send to a wallet or receive a merchant payment. A gateway performs a different function from a card scheme or the Central Bank’s settlement system. Requiring every system to connect directly with every other system would create unnecessary links and new security risks. Regulations must identify the services that require connection, the institution responsible for each step and the standard each connection must use.

Technical connection alone will not produce an open market. The Bill does not expressly require access to be fair, reasonable and non-discriminatory. It does not set switching fees, the charges institutions pay one another, settlement times, minimum service levels or responsibility for a failed instruction. A network could meet the technical standard while making access unattractive through high prices, slow settlement, minimum volumes or restrictive contracts. A regulated price set below the cost of secure infrastructure could create the opposite problem by leaving too little money for maintenance and upgrades.

The Policy proposes better access to core clearing and settlement systems for eligible non-bank providers. Clearing calculates what participating institutions owe. Settlement completes the payment by moving the final funds. At present, non-bank providers generally reach those systems through commercial banks that hold settlement accounts at the Central Bank. The Bill does not give a qualified non-bank a right to participate directly, define the financial and technical conditions it must meet or require an existing system to admit it on published terms.

Direct access will not suit every fintech. A company settling payments through its own Central Bank account would need to manage liquidity, security, operating hours and the consequences of failing to fund its obligations. A smaller firm may be better served by a sponsor bank that settles on its behalf. Dependence becomes a competitive constraint when that bank also competes with the fintech, can observe sensitive transaction flows or can terminate the service without a practical alternative. Kenya needs published standards for direct participation and transparent sponsor-bank arrangements for companies that remain indirect.

A shared standard can reduce the separate connections that merchants and fintechs must build. One recipient identifier, message format or QR code could allow a payment to reach customers of several institutions. The saving reaches the user only when the price, speed, reliability and complaints process are also comparable. The draft requires connection but leaves those commercial terms for later rules.

Open finance changes what a payment company is.

A Kenyan with two bank accounts and a mobile wallet may now see three balances, three transaction histories and three authentication processes. A budgeting or credit application can ask the customer to upload statements, build a separate agreement with each institution or request login information through an unsafe workaround. The customer usually returns to the bank or wallet holding the account to make a payment.

The Bill recognises two intermediaries that could change that process. An account-information service provider could, with permission, collect balances and transactions from several accounts and display them in one application. A payment-initiation service provider could send a payment instruction to the institution holding the customer’s money. The customer would authorise the payment, while the third party would provide the interface and transmit the instruction.

The Bill creates those licence categories but leaves the working system to later rules. Regulations must identify the accounts and data fields covered, whether banks and mobile-money operators contribute on equal terms, how customers prove identity, response times and connection charges. They must assign responsibility when an instruction is altered, duplicated or sent to the wrong recipient and give customers one place to see and withdraw their permissions.

Kenya’s Data Protection Act requires a lawful purpose, limited collection and safeguards appropriate to the risk. Open-finance rules must identify which company controls each use of the data and which merely processes it for another company. Permission to display a balance cannot silently become permission to analyse spending for advertising, lending or insurance. The Bill’s seven-year retention requirement for payment records should not give every third-party application the right to retain copied information for seven years after the customer withdraws consent. The Office of the Data Protection Commissioner needs a defined role where a payment dispute also involves misuse or loss of personal data.

The United Kingdom uses common specifications for open-banking connections, security and testing. Brazil combines open finance with its central-bank-led Pix system. Kenya’s mobile wallets are often as important as bank accounts. Its rules must give wallet customers equal control and stop one class of institution from supplying data while another mainly consumes it.

Providers should not collect a customer’s password and log in on the customer’s behalf, a practice known as screen scraping. It increases the opportunity for theft and obscures responsibility. Secure standard connections let customers withdraw permission and show regulators who requested data or initiated a payment.

The money behind the wallet.

A mobile-money balance feels like a bank deposit because it can be sent, spent and withdrawn. The provider creates electronic value after receiving ordinary money, while an equivalent amount is pooled in a trust. It cannot become the provider’s own money or pay its other creditors. Daily reconciliation should match customer balances to the money behind them.

The draft Bill would require electronic-money issuers and electronic-wallet providers to keep customer funds in trust at a bank or microfinance bank. The funds could be placed in government securities or interest-bearing accounts. The provider could not mix them with its operating money, and its creditors could not claim them if the provider became insolvent. Income earned by the trust could be used for charitable or another prescribed purpose with Central Bank approval rather than becoming ordinary company revenue.

The draft would weaken diversification for some trust balances if its wording is applied literally. The 2014 Regulations generally allow no more than 25 percent of a trust exceeding KSh100 million to be placed in one strong-rated bank. The Bill would permit up to KSh500 million or 25 percent of the trust, whichever is higher, in one institution. A KSh1 billion trust could therefore place KSh500 million with one bank. That would be half of the fund rather than the 25 percent allowed under the current rule. The two tests become equal when the trust reaches KSh2 billion. Treasury should explain the intended protection or replace “whichever is higher” with a limit that preserves diversification.

A trust protects customer funds from the wallet provider’s creditors, but several other failures can still block access to money. The bank holding the trust can fail. The wallet ledger can stop matching the trust account. An employee can steal funds. A cyberattack can disable access. A cloud or messaging supplier can go offline. The Bill would require reporting of such events and allow the Central Bank to intervene or appoint a statutory manager.

The Bill also protects settlement finality. Once a qualifying payment has been completed, it cannot ordinarily be reversed merely because one participant later enters insolvency. Finality prevents a failed institution’s administrator from reopening completed payments and passing uncertainty through the rest of the system.

Trust protection does not guarantee immediate repayment to each customer. The draft sets no deadline for returning wallet balances after a provider fails. It does not explain how disputed records would be reconciled before distribution or create a standing fund to finance a rapid payout. Regulations should require providers to maintain tested recovery plans, portable customer records and a clear process for returning funds while insolvency proceedings continue.

A licensed provider may depend on a cloud platform, identity company, messaging service, agent network and bank account it does not control. Prior approval gives the Central Bank visibility. The provider should remain responsible for security, continuity and customer redress even when its supplier operates outside Kenya.

The state becomes regulator and infrastructure builder

The Policy proposes a national instant-payment switch and shared digital infrastructure that public and private services could use. The National Government and implementing agencies would fund the program through their budgets. Ownership, operation, cost and the relationship with existing switches remain unassigned.

Section 16 of the Bill would allow the Central Bank to establish, own or operate financial-market infrastructure related to its mandate. The Bank would also license payment businesses, approve connection arrangements, inspect systems, enforce conduct and intervene in management. Infrastructure established or owned by the Central Bank would not need the licence imposed on a commercial operator.

KEPSS is owned and operated by the Central Bank. Brazil’s central bank owns Pix, operates its settlement system and recipient database, and sets participation rules. Larger institutions must participate, while others can obtain direct or indirect access. Participant charges recover the system’s cost. Roughly 900 institutions participated by July 2026.

India’s industry-owned National Payments Corporation, supervised by the Reserve Bank of India, operates UPI. It processed 24.5 billion transactions worth almost 29.8 trillion rupees through 752 banks in August 2026. Ghana’s central-bank-owned GhIPSS supports instant bank payments, mobile-money interoperability and a universal merchant QR code.

Each arrangement identifies the operator, the conditions of entry, participant obligations and the method used to pay for the infrastructure. Kenya’s drafts identify none of those features for the proposed switch.

If the Central Bank operates it, the infrastructure unit should have separate leadership, accounts, data controls and decisions from the teams that supervise participants. Entry conditions and charges should be published. A company refused access should receive written reasons and a route of appeal outside the operating unit. The Competition Authority should be able to examine a price or technical rule that favours one class of participant. Transaction data collected to operate the switch should enter supervision or enforcement only through a defined legal process.

An industry-owned operator would need similar controls because incumbent shareholders could design entry rules that protect their own position. A private operator would need a public-interest mandate if the Government required competitors to connect to it. Public ownership removes a private shareholder’s profit claim but does not prevent discrimination, inefficiency or hidden subsidies.

The governance cannot wait for software procurement. The switch’s design will determine how a phone number or other identifier finds the recipient, which information travels with the payment, when the payment becomes final, who pays after failure and what each institution pays to connect. Those technical choices will become commercial rules for the market.

Domestic rails meet regional payments

Official remittance inflows reached US$5.04 billion in 2025. A separate household survey estimated KSh931.8 billion received between June 2024 and May 2025, including reported transfers outside the formal-provider data. Banks and mobile money handled more than 92 percent of reported receipts, while the United States supplied 43.5 percent. Among cash-remittance recipients reporting a problem, 83.3 percent identified high cost.

Kenya participates in the East African Payment System and COMESA’s Regional Payment and Settlement System. PesaLink has announced a connection to the Pan-African Payment and Settlement System. These connections can shorten parts of a regional transfer, but the payment may still encounter currency conversion, shortages of settlement liquidity, sanctions screening, different licences, limited payout options and mismatched operating hours. A fast Kenyan switch cannot remove a foreign-exchange spread or compel an institution in another country to accept a payment.

The Bill would require identifying information about the payer and recipient to travel with a payment. A provider generally could not execute an instruction missing the prescribed information. The Cabinet Secretary would later set the enhanced information required above specified cross-border thresholds. Common, well-structured records can reduce manual checks and repeated data entry. Matching inconsistent customer names, account identifiers and records across institutions will impose new costs.

ISO 20022 gives Kenyan institutions a common format capable of carrying richer payment information. A shared format cannot settle the policy questions between countries. Regional connection also requires agreement on settlement currencies, foreign exchange, data transfers, fraud responsibility, consumer redress and the regulator responsible when institutions in two jurisdictions disagree. Kenya can make its domestic system easier to connect without being able to create a regional network by itself.

The implementation test.

The drafts would replace the 2011 Act, create more licence categories and impose a direct duty to use interoperable systems. Account-information and payment-initiation businesses would enter the regulatory framework. The statute would also govern trust funds, incident reporting, payment traceability, completed settlement and Central Bank intervention in greater detail.

The rules that determine competition and price remain unwritten. The Policy proposes a national switch without naming its owner or operator. The Bill requires connection without an express right to fair and non-discriminatory access. It recognises open finance without defining the data, software standard, price or responsibility after fraud. It supports greater non-bank participation without giving qualified companies a route to direct settlement. It sets capital by activity without explaining the loss behind every threshold. Its trust-fund formula appears to allow greater concentration for some balances than the present Regulations.

Public participation should address those design choices. Regulations will need to specify the transactions that must cross providers, the institutions eligible for direct participation, service levels, charges and responsibility for operational or fraud losses. The Policy should identify the proposed switch’s governance, funding and relationship with existing infrastructure before public money is committed. If the Central Bank operates the switch, it should publish the separation between its operating and supervisory functions.

Five years after implementation, success should be visible in ordinary transactions. A customer should know the total charge before sending money across providers and receive a timely remedy after failure. A merchant should accept several payment sources through fewer connections and compare the full cost of acceptance and settlement. A fintech meeting published risk standards should reach infrastructure without surrendering its customer relationship to a competing sponsor. Banks and mobile-money operators should compete through service, reach and risk management rather than exclusive control of an essential connection.

The Government can publish the share of accounts and merchants reachable across providers, non-bank participation, median charges, availability, settlement speed, outages, fraud losses, complaint times and rejected access applications. Concentration should cover transaction value as well as subscriptions. A public switch should disclose its cost per transaction, charges and recovery performance. Open-finance reporting should cover active permissions, successful connections and withdrawal speed.

Supervising more activities will require Central Bank staff who understand software, cloud concentration, cyber incidents, data protection, liquidity and the economics of payment networks. A national switch will require continuous investment, security testing and recovery exercises. Its multiyear budget and cost-recovery method should be public.

The consultation remains open until 9 October 2026. Treasury and the Central Bank can still convert a broad promise of openness into enforceable access rules. Parliament can require a governance framework before the national switch is procured. Industry can identify where one connection would remove duplication and where compulsory access would create risk. Consumer and data-protection bodies can define the remedy when a fast payment moves quickly to the wrong person.

Kenya’s first digital-payments era made a private mobile network part of the country’s economic infrastructure. The next will be built beneath the phone screen, where entry conditions, settlement rights, prices and governance determine which institutions can move money. The customer will still see a simple instruction. The rules below it will decide who may carry that instruction, at what price and under whose control.