Founders building a card acceptance business in Kenya usually ask two questions: do we need a licence to sign merchants, and do we need one to run a card network? The draft National Payment System Bill, 2026 answers both by name. It creates a merchant acquirer licence and a card scheme operator licence, each with KES 50 million minimum capital. The current Act has neither label. This article explains the difference between the two, what the Bill would change and how to prepare.
Where the law stands today
The National Payment System Act, 2011 does not use the words merchant acquirer or card scheme. Section 2 defines a payment service provider broadly, to include a person acting as provider in relation to sending, receiving, storing or processing of payments through any electronic system. Section 13 requires such a person to apply to the Central Bank of Kenya (CBK) for authorisation before starting business. We also found no reference to acquirers or card schemes in the National Payment System Regulations, 2014. An acquirer today is therefore assessed under the general payment service provider definition, a point to confirm with CBK for your exact model.
The Act does regulate payment systems separately. Section 3 lets CBK designate a payment system that poses systemic risk, is needed to protect the public interest or matters for the integrity of the payment system. Section 4 provides that amendments to the constitution and rules of a designated system take effect only once CBK approves them. Under section 3(8) and (9), an operator advised by CBK to apply for designation must do so, and continuing to operate an undesignated system after that advice is an offence.
Two different licences under the Bill
The Bill defines a merchant acquirer as a payment service provider through which merchants process payment transactions by accepting different payment instruments, so that payment flows from the consumer to the merchant. It is the third-listed category of payment service provider in the First Schedule, alongside payment initiation, account information, wallet, remittance and e-money issuer licences.
A card scheme is defined as a card network system or payment network system that facilitates electronic payments using credit, debit and prepaid cards. A card scheme operator is a payment system operator that runs one. It sits in the second licence family, payment system operators, next to payment gateways, payment messaging and switching and clearing operators. Clause 4(1)(j) also brings within the Bill any person who owns, possesses, operates, manages or controls a card scheme.
The practical point is that these are separate licences in separate families. A business that signs merchants is an acquirer. A business that sets the rules and runs the network between issuers and acquirers is a scheme operator. A group doing both should expect to apply for both categories. We found nothing in the Third Schedule saying whether the capital amounts are cumulative, so ask CBK before you size the balance sheet.
What the Bill would require
| Licence | Family | Minimum capital |
|---|---|---|
| Merchant acquirer | Payment service provider (clause 5) | KES 50 million |
| Card scheme operator | Payment system operator (clause 6) | KES 50 million |
For comparison, a payment gateway needs KES 10 million, a payment messaging operator KES 20 million and an e-money issuer KES 250 million. Capital is only the entry point. Four further provisions bite on card businesses in particular:
- Designation (clause 16). CBK may designate a payment system or payment instrument if it poses systemic risk, protects the public interest or supports system integrity, and must attach conditions to the operator or issuer. Breach of a condition is an offence. A large scheme is the obvious candidate.
- Interoperability (clause 28). Every provider and operator must use systems interoperable with those of other providers, operators and their agents. CBK may require an interoperability arrangement, and failure exposes the provider to administrative enforcement.
- Outsourcing (clause 30). Outsourcing an operational function to a third party needs CBK’s prior written approval. The outsourcing must not impair internal control or CBK’s ability to monitor compliance. Acquirers that rely on an overseas processor should map each such arrangement against this clause.
- Agents (clause 31). A provider may appoint agents, but it is liable for their acts and omissions when acting for it.
Transition risk
The Bill would repeal the Act under clause 78, and clause 79 gives a one-year transition. We found no savings clause, so an existing acquirer cannot assume its current authorisation carries over automatically. A foreign card group planning a Kenyan acquiring entity should design for the Bill’s categories now and treat the final text as subject to change. Our notes on the Bill overview and foreign ownership cover the shared requirements.
How to prepare
- Decide whether your model is acquiring, scheme operation or both, and identify each licence it triggers.
- List every third party that touches settlement or processing and test it against clause 30.
- Plan capital for the higher of the possible outcomes until CBK confirms how amounts combine.
- Read the Bill’s interoperability and designation clauses against your expected market share.
- Build the Kenyan entity and shareholder file to the Second Schedule suitability criteria from the start.
How We Can Help
We map card acceptance and scheme models against the Bill’s licence categories, plan the Kenyan entity and capital, and review processor and agent agreements for the outsourcing and interoperability requirements. Speak to our financial services team at Clay & Associates Advocates.
Sources: The National Payment System Bill, 2026, clauses 2, 4, 5, 6, 16, 28, 30, 31, 78 and 79 and the First, Second and Third Schedules (CBK); National Payment System Act, 2011, sections 2, 3, 4 and 13 (Kenya Law); National Payment System Regulations, 2014 (CBK).
Frequently asked questions
Is a merchant acquirer licensed today?
The Act has no acquirer category. Acquirers are assessed under the general payment service provider definition and CBK’s authorisation process. Confirm your model with CBK.
What capital do the acquirer and scheme licences need under the Bill?
KES 50 million each under the Third Schedule.
Do I need both licences if I sign merchants and run a card network?
The Bill lists them as separate categories, so expect to apply for both. It does not say whether the capital amounts add up.
Can I outsource processing to an overseas provider?
Only with CBK’s prior written approval under clause 30, and not in a way that impairs internal control or CBK’s oversight.
Need advice on your own matter?
Tell us what you are dealing with. You will know what it involves and what it costs before you commit.
This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.
