What happened

The Central Bank of Kenya (CBK) has formally presented a Draft National Payment System Bill for 2026 to Parliament. The draft seeks to grant the regulator broader powers to supervise mobile money operators, digital wallet providers and emerging fintech platforms, including firms like Dawan Africa. By redefining licensing requirements, transaction monitoring and enforcement tools, the bill intends to align Kenya’s payment ecosystem with evolving digital risks while preserving the country’s reputation for financial inclusion.

Context and background

Kenya’s payment landscape has been shaped over the past decade by the rapid rise of mobile money services, most notably M-Pesa, which now processes billions of shillings in daily transactions. The CBK, established in 1966, traditionally focused on bank supervision, foreign exchange stability and macro‑economic policy. However, the explosive growth of non‑bank payment providers prompted the regulator to expand its supervisory remit through the Payments and Settlements Systems Act of 2011 and subsequent amendments.

In recent years, fintech startups have introduced digital wallets, peer‑to‑peer platforms and crypto‑related services that operate alongside traditional mobile money. Dawan Africa, a Nairobi‑based fintech, has been highlighted in industry discussions for its innovative wallet solution that integrates cross‑border remittances and merchant payments. While such innovations have deepened financial inclusion, they have also raised concerns about consumer protection, AML/CFT compliance and systemic risk.

The draft bill emerges after a series of stakeholder consultations that included banks, mobile network operators, fintech firms and consumer groups. Those consultations revealed divergent views: providers argued that excessive regulation could stifle innovation, whereas regulators emphasized the need for a unified legal framework to address fraud, data security and interoperability challenges. The bill therefore reflects a compromise that seeks to preserve Kenya’s competitive edge while tightening oversight where gaps have been identified.

Compared with what is normal

Under the existing Payments and Settlements Systems Act, the CBK’s authority to intervene in mobile money operations is limited to issuing general guidelines and conducting periodic audits. The draft bill expands that authority in three key ways:

• It introduces a mandatory licensing regime for all digital wallet providers, not just those linked to banks.
• It authorises the CBK to set transaction ceilings for high‑risk services and to require real‑time reporting of large or suspicious transfers.
• It provides enforcement powers, including the ability to levy fines, suspend licences and, in extreme cases, seize assets of non‑compliant entities.

Compared with the current framework, these provisions represent a significant tightening of regulatory oversight. Historically, Kenyan mobile money operators have enjoyed a relatively light‑touch approach, which contributed to rapid adoption but also to incidents of fraud and money‑laundering that prompted calls for reform.

Why it matters

For small and medium‑size enterprises (SMEs) that rely on mobile money and digital wallets for day‑to‑day transactions, the bill could bring both stability and new compliance costs. Stronger oversight may reduce fraud incidents, protect customer funds and improve confidence among foreign investors. At the same time, licensing fees, reporting obligations and potential transaction limits could increase operational expenses for fintech providers, which may be passed on to business users.

Finance teams within SMEs should be aware that the bill may require them to adjust internal controls, update AML/CFT procedures and maintain more detailed records of electronic payments. The CBK’s enhanced powers also mean that any breach of the new rules could result in swift regulatory action, including fines or suspension of services, which could disrupt cash flow for businesses that depend heavily on mobile money channels.

From a broader economic perspective, aligning Kenya’s payment regulations with international best practices could facilitate cross‑border trade, attract fintech investment and support the country’s ambition to become a regional hub for digital finance. However, the transition period will test the capacity of both regulators and private firms to adapt to a more formalised environment.

Practical steps

• Review your current payment processing arrangements and identify any services that fall under the definition of a digital wallet or fintech platform.
• Update internal AML/CFT policies to reflect the likely reporting requirements outlined in the draft bill, ensuring that large or suspicious transactions are flagged promptly.
• Engage with your mobile money or wallet provider to understand how they plan to comply with the new licensing regime and what changes, if any, will affect transaction fees or limits.
• Consider conducting a risk assessment of your reliance on non‑bank payment channels, and develop contingency plans in case of service interruptions during the regulatory transition.

Financial Management & Analysis services at Beavoren Ventures can help SMEs navigate the regulatory changes, assess compliance costs and redesign financial controls to align with the new framework.

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.