Payment service provider licensing in Kenya looks straightforward on paper: apply to the Central Bank of Kenya, meet the capital and governance requirements in the National Payment System Regulations 2014, and get authorised. What catches foreign fintechs off guard is how wide the statutory definition is, how short the authorisation period runs, and that a replacement law is now out in draft.
What actually needs a licence, and how many providers already have one
The Central Bank of Kenya’s directory of authorised payment service providers, as at 10 August 2026, lists 44 institutions, grouped by the service each is approved to provide rather than by licence type. The National Payment System Regulations 2014 (Legal Notice 109 of 2014) use four statutory categories in their First Schedule: electronic retail payment service provider, e-money issuer, small e-money issuer and designated payment instrument issuer. There is no separate category for account-information or payment-initiation services, so such a business is assessed against those categories. The 2026 Bill discussed below would change that.
The core rule is section 12 of the National Payment System Act (Cap. 491A): no one may conduct the business of a payment service provider in Kenya without authorisation, on pain of a fine of up to KES 500,000, imprisonment of up to three years, or both. The application is made on Form 1 with a non-refundable KES 5,000 fee (Regulation 5) and must cover, among other things, a business plan, governance and internal controls, AML/CFT controls, settlement arrangements, fit-and-proper forms for directors, trustees and managers, a tax compliance certificate, a credit rating report and, for a subsidiary of a foreign company, a no-objection letter from its home regulator (Regulation 4(2)). Core capital must be held at all times: KES 5,000,000 for an electronic retail payment service provider and KES 20,000,000 for an e-money issuer (Regulation 11, First Schedule). The authorisation fee is KES 100,000 and KES 1,000,000 respectively. Customer funds must sit in a trust, apart from operating funds, with licensed banks or in Government securities (Regulation 25). Three companion notes go deeper: e-money issuer or electronic retail PSP, the application file, document by document and trust account rules.
The Regulations set no overall deadline for CBK to decide. It may ask for more information within 30 days of receiving an application (Regulation 5(3)), and issues the certificate within seven days of receiving the authorisation fee (Regulation 5(5) and (6)); a rejection must be explained within seven days (Regulation 5(7)). An authorisation lasts twelve months (section 13(6) of the Act), so renewal is a yearly exercise, with fees from KES 20,000 rising with transaction value (First Schedule, Table B).
Who counts as a payment service provider: the KENEX case
Section 2 of the Act defines a payment service provider widely: anyone acting as a provider in relation to the sending, receiving, storing or processing of payments through an electronic system, and anyone who processes or stores data on behalf of such providers or their users. In Kenya Commerce Exchange Service Bureau Limited (Kenex) v Central Bank of Kenya, a supplier of SWIFT connectivity software to banks argued that it was not a payment service provider. Ong’udi J called that a narrow reading, found it to be a facilitator in the banks’ payment system, and dismissed the petition with costs on 30 September 2022. KENEX now appears in CBK’s directory, first licensed on 16 March 2023.
Fintechs building on licensed rails, marketplaces with an embedded checkout and software vendors adding a payment step often assume they sit outside CBK’s perimeter because they never touch the money. The statutory definition and this decision give CBK a real basis to argue otherwise. It is a first-instance decision on its own facts, so treat it as a warning rather than a rule and assess your actual payment flow.
Where the Virtual Asset Service Providers Act changes the picture
The Virtual Asset Service Providers Act, 2025 (Cap. 491B) commenced on 4 November 2025 and amended the National Payment System Act, which already sets out CBK’s powers on anti-money laundering and counter-terrorism financing matters (section 17A). For a payments business building stablecoin rails, crypto on/off-ramps, or any payment flow that touches a virtual asset at any leg of the transaction, this means two regulatory regimes can now apply to the same product: the payment-system licensing analysis above, and the separate virtual-asset-service-provider framework. We cover the wallet-custody side of that framework in our guide to custody obligations for Kenya’s virtual asset wallet providers.
The National Payment System Bill, 2026: what changes
The National Treasury and CBK published the draft National Payment System Bill, 2026 and a draft Policy for public comment in September 2026, with comments closing on 9 October 2026 (public notice). The Bill would repeal the National Payment System Act (clause 78) and replace the present categories with six payment service provider licences: payment initiation, account information, merchant acquirer, electronic wallet, money remittance and electronic money issuer (First Schedule). Minimum capital would run from KES 5 million for payment initiation and account information providers to KES 50 million for electronic wallet providers and merchant acquirers and KES 250 million for e-money issuers (Third Schedule). A foreign company limited by shares holding a certificate of compliance could apply directly (clause 7(1)(b)). Our full note on the Bill’s licences and capital sets out each threshold, and our guide to foreign-owned applicants covers the home regulator letter.
The transition is the planning risk. Clause 79 gives anyone providing payment services one year from commencement to comply, and the draft has no savings clause for existing authorisations or pending applications. It is still a draft, so confirm the position before committing capital. We examine the gap in what happens to a pending PSP application if the Bill passes.
How We Can Help
Clay & Associates Advocates advises fintechs and payment businesses on Central Bank of Kenya authorisation, including the capital, governance and AML/CFT documentation CBK requires, on how the draft 2026 Bill affects an application, and on how the KENEX precedent and the Virtual Asset Service Providers Act 2025 affect a specific product’s licensing exposure. Our guide to Digital Credit Provider licensing in Kenya covers the adjacent CBK regime for digital and other non-deposit-taking lenders, useful where a payments product also extends credit. Once licensed, see our notes on post-authorisation obligations and open banking under the Bill, as well as AML, FRC and data protection duties and the money remittance licence Card acceptance is covered in our note on merchant acquirer and card scheme licences. Contact our Financial Services team before you assume a product sits outside CBK’s licensing perimeter.
Sources: National Payment System Act (Cap. 491A), sections 2, 12, 13 and 17A; National Payment System Regulations 2014, Legal Notice 109 of 2014, regulations 4, 5, 11 and 25 and the First Schedule; Central Bank of Kenya, Directory of Authorized Payment Service Providers, as at 10 August 2026; National Payment System Bill, 2026, clauses 7, 78 and 79 and the First and Third Schedules; Treasury and CBK public notice on the draft Policy and Bill; Virtual Asset Service Providers Act, 2025 (Cap. 491B); Kenya Commerce Exchange Service Bureau Limited (Kenex) v Central Bank of Kenya, Constitutional Petition E181 of 2021, [2022] KEHC 13189 (KLR).
Frequently asked questions
Does a platform that never holds customer funds still need a PSP licence in Kenya?
Possibly. Section 2 of the Act defines a payment service provider widely, and in the KENEX case the High Court treated a software bureau facilitating banks’ payment messaging as one, though it held no customer funds. Assess your product flow against that definition rather than assuming a software-only role is outside scope.
Is there a separate licence for open banking or account-information services in Kenya?
Not under the current Regulations, which assess such a business against the existing categories. The draft National Payment System Bill, 2026 would create separate payment initiation and account information licences, each with minimum capital of KES 5 million, but it is still a draft.
How long does CBK take to decide a PSP application?
There is no fixed deadline. CBK may ask for more information within 30 days of receiving an application, and issues the certificate within seven days of receiving the authorisation fee once it is satisfied (Regulation 5). How long the process takes in practice depends mainly on how complete the application is.
Does building on crypto rails change the licensing analysis?
Yes. The Virtual Asset Service Providers Act 2025 created a separate licensing framework for virtual-asset activity, so a crypto-adjacent payments product may need to be assessed against both regimes rather than payment-system licensing alone.
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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.
