If you have a payment service provider application with the Central Bank of Kenya (CBK) today, or hold an authorisation granted under the National Payment System Act, the draft National Payment System Bill, 2026 raises an uncomfortable question: what becomes of that application or authorisation if the Bill passes? The honest answer is that the draft does not say. This article sets out what the Bill and the current law actually provide, where the gap lies, and how an applicant can limit its exposure.
How a pending application works today
Under the National Payment System Regulations, 2014, an applicant files Form 1 with the fee under Regulation 5(2). CBK may ask for further information, which the applicant must supply within thirty days (Regulation 5(3)). If CBK is satisfied, it advises the applicant to pay the authorisation fee, and must issue the certificate of authorisation within seven days of receiving that fee (Regulation 5(5) and (6)). If CBK rejects the application, it must give reasons within seven days (Regulation 5(7)). The Regulations fix no overall deadline for the decision, so a pending application can sit with CBK for some months. Under section 13(6) of the Act, an authorisation is valid for twelve months and is deemed to continue while a renewal application is pending.
What the Bill says about transition
Clause 78 repeals the National Payment System Act (Cap. 491A). Clause 79 is the only transitional provision. It reads, in substance, that upon commencement any person providing payment services shall, within one year of commencement, comply with the Act, and that CBK shall issue guidance to give effect to the section. We found no other saving clause, and nothing that mentions an application already filed or an authorisation already granted. Four consequences follow from that silence:
- No stated carry-over. The draft does not say that an existing authorisation is treated as a licence in the closest new category, or that it lapses.
- No stated fate for pending applications. It does not say whether CBK finishes processing a pending application under the old law, treats it as an application under clause 5, or requires a fresh one.
- A one-year window for everyone. Clause 79(1) applies to “any person providing payment services”, which on its words covers both new entrants and existing providers.
- Everything else rests on guidance. Clause 79(2) leaves the mechanics to CBK guidance, which is not itself legislation and, as far as we can see, has not been published.
Why the gap matters
A payments business that is authorised under the Act today may need to be licensed in a different category under the Bill. The categories do not map one for one. The Regulations authorise an electronic retail payment service provider, a designated payment instrument issuer, an e-money issuer and a small e-money issuer. The First Schedule to the Bill lists six payment service provider categories and four payment system operator categories. A business that today holds one authorisation may find that its services fall across two or more new licences, and clause 10(6) of the Bill sets the combined capital at the highest category in full plus fifty per cent of the minimum for each additional one. Our article on the Bill’s licences and capital sets out the figures, which can be much higher than today’s: for example KES 250 million for an e-money issuer, against KES 20 million now.
Timing is the second problem. Under clause 5(4), carrying on business as a payment service provider without a licence is an offence once the Act is in force. A pending applicant cannot assume it will be treated as licensed. Clause 79(1) gives one year to comply, but a provider that waits for guidance may find the year already running.
Third, the Bill’s new process has different terms. Clause 7(5) gives CBK a “prescribed period” to process a complete application, which the draft does not define. A declined applicant waits twelve months before reapplying (clause 7(7)), where we found no equivalent bar in the Regulations. Under clause 8(2) a licence lasts until revoked or suspended, so the annual renewal cycle under section 13(6) of the current Act would end, though annual fees remain payable under clause 8(3).
What an applicant should do now
We do not recommend pausing a needed application on account of a draft Bill. The Act and Regulations remain the law until Parliament acts and the Bill is commenced, and an unlicensed business carries enforcement risk today. We would, however, take these steps:
- apply for the authorisation that fits the business today, and design the company, capital and directors to meet the Bill’s higher tests (clause 7(2) and clause 11) so there is little to redo;
- record in the engagement and the board papers that the application is made against a changing regime, so shareholders accept the risk of higher capital;
- ask CBK in writing how it expects to treat pending applications and existing authorisations, and keep the reply on the file;
- watch for the final text: Parliament may add a saving clause that the draft lacks, and CBK’s guidance under clause 79(2) will matter as much as the statute.
The general rules on the effect of repealing an Act may protect rights that have already accrued, but a draft statute should not be left to them, and a pending application is not a granted right. Treat the point as unsettled and plan on that basis. Our overview of PSP licensing in Kenya today and our fintech regulation guide explain the current process. To discuss your own application, contact the financial services team at Clay & Associates Advocates.
Sources: The National Payment System Bill, 2026, clauses 5, 7, 8, 10, 78 and 79 and the First and Third Schedules (CBK); National Payment System Regulations, 2014, regulation 5 and the First Schedule (CBK); National Payment System Act, 2011 (Cap. 491A), section 13(6).
Frequently asked questions
Will my pending PSP application survive if the Bill passes?
The draft does not say. Clause 78 repeals the Act and clause 79 only requires compliance within one year of commencement. Ask CBK how it will treat pending files.
Do existing authorisations convert into licences?
We found no conversion clause in the draft. Existing providers would have to comply with the new Act within one year, on CBK’s guidance.
Should I delay my application until the Bill is settled?
Usually not. The current law applies until the Bill is commenced, and operating without authorisation carries risk now.
Could capital requirements rise for existing providers?
Yes, if the draft’s Third Schedule survives. For example, an e-money issuer would need KES 250 million, against KES 20 million today.
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.
