What happened

In a recent announcement, the Central Bank of Kenya (CBK) confirmed that four new activities have been added to the list of services officially registered under KNET, the country’s leading electronic payment network. At the same time, the regulator removed the electronic bill collection service from KNET’s approved portfolio. The decision was communicated to banks, payment service providers and merchants through a formal circular, signalling the regulator’s intent to streamline digital payment offerings and address emerging market needs.

Context and background

KNET, launched in 2002, has grown to become the backbone of electronic transactions for banks, micro‑finance institutions and a wide array of merchants across Kenya. It enables real‑time fund transfers, point‑of‑sale (POS) payments, and mobile money integrations that link directly to bank accounts. Over the years, CBK has overseen KNET’s service catalogue, granting approvals for each activity after assessing risk, compliance and consumer protection considerations.

The four activities now approved are: (1) QR‑code based payments for small retailers, (2) bulk payroll disbursements for large employers, (3) automated reconciliation for e‑commerce platforms, and (4) cross‑border remittance settlements through partner networks. These additions respond to a surge in demand from SMEs that need faster, lower‑cost ways to receive payments and settle supplier invoices, especially after the pandemic accelerated digital adoption.

Conversely, the electronic bill collection service – which allowed utilities and service providers to generate and send electronic invoices for direct debit – was removed from KNET’s register. CBK cited overlapping functionalities with newer platforms, limited uptake, and concerns over data security as reasons for the withdrawal. The regulator encouraged affected entities to migrate to alternative solutions that already meet the bank’s security standards.

Stakeholders, including the Kenya Bankers Association and the Kenya ICT Authority, welcomed the move, noting that the new services align with the national Vision 2030 goal of a cash‑lite economy. However, they also urged CBK to provide clear migration timelines and technical guidance to minimise disruption for businesses still using the discontinued bill collection feature.

Compared with what is normal

Historically, KNET’s service list has expanded incrementally, with major additions occurring roughly every two to three years after extensive pilot testing. The current four‑activity rollout represents the fastest batch of approvals in the past decade. By contrast, the removal of a service is relatively rare; the last comparable action was in 2015 when KNET discontinued a legacy card‑linking feature that had low merchant adoption.

• Typical approval cycles for new KNET services range from 12 to 18 months, involving stakeholder consultations, risk assessments and system integration tests.
• Electronic bill collection accounted for less than 5% of total KNET transaction volume, according to industry estimates, which explains the regulator’s willingness to retire the service without major market shock.
• QR‑code payments, now approved, have already seen a 30% year‑on‑year growth in pilot cities such as Nairobi and Mombasa, indicating strong market readiness for the new offering.

Why it matters

For Kenyan SMEs, the addition of QR‑code payments and bulk payroll capabilities can reduce transaction costs and accelerate cash flow. Small retailers can now accept payments without needing costly POS terminals, while larger employers can automate salary disbursements, cutting down on manual processing errors. The automated reconciliation feature helps e‑commerce platforms match incoming payments with orders instantly, lowering the risk of fraud and improving customer trust.

Removing electronic bill collection may create short‑term challenges for utilities, schools and other service providers that relied on the feature. These entities will need to transition to alternative invoicing platforms, which could involve system upgrades and staff retraining. However, the shift also pushes the market toward more secure, interoperable solutions that are better integrated with Kenya’s broader digital financial ecosystem.

From a regulatory perspective, CBK’s move demonstrates a proactive stance in refining the payment landscape to favour services with higher adoption potential and stronger security frameworks. This aligns with the Central Bank’s ongoing efforts to enhance financial inclusion, reduce cash handling costs, and protect consumer data in an increasingly digital economy.

Practical steps

• Review your current payment processes and identify if any of the newly approved KNET activities can replace existing, more expensive methods. Start with QR‑code payments for low‑ticket sales.
• If you are a large employer, engage your bank’s treasury department to explore bulk payroll disbursement through KNET, ensuring you meet any onboarding requirements.
• For businesses using electronic bill collection, contact your service provider within the next two weeks to discuss migration pathways to alternative invoicing platforms endorsed by CBK.
• Update your internal controls and staff training modules to incorporate the security protocols associated with the new KNET services, reducing the risk of fraud or compliance breaches.

Our Financial Management & Analysis service can help you assess the financial impact of adopting the new KNET activities, redesign cash‑flow processes, and ensure a smooth transition away from discontinued services.

Talk to our team at Beavoren Ventures - info@beavorenventures.co.ke - to set up your systems correctly.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.