The National Treasury, in support of the Central Bank of Kenya (CBK), has released the National Payment System Bill, 2026 (the “Bill”) and the Draft National Payment System Policy for public comment. The Bill seeks to repeal the National Payment System Act (the “Act”) and, among other objectives, promote interoperability, competitiveness, and openness in the national payment system; support innovation; and foster a safe, secure, effective, and efficient national payment system.  

Changes in the Bill  

The Bill introduces a raft of changes not provided for in the Act. These include mandatory interoperability by each payment service provider or system operator with the systems used by other system operators or providers, and their agents. Additionally, the Bill introduces aspects of trust accounts, under which each issuer of electronic money and provider of electronic wallets shall ensure that all monies received from customers are held in a trust account of a bank or a microfinance bank. The Bill further sets limits on the amount held in a trust account, not more than 500 million shillings or more than 25% of the monies in a trust account, whichever is higher, in a single bank. However, the capping at 500 million shillings defeats the requirement of not more than 25% of the monies.    

Like banking and microfinance institutions, the Bill also changes the minimum capital requirements that a licence holder must maintain at all times. Failure to do so will expose the holder to administrative action by the CBK. The minimum capital requirements vary across licence categories, which are mainly divided into two broad categories, namely payment service provider and payment system operator.   

Under the two categories, the following licence holders are required to maintain core capital; they are: Payment Initiation Service Provider; Account Information Service Provider; Money Remittance Service Provider; Merchant Acquirer; Electronic Wallet Provider; Electronic Money Issuer; Payment Gateway; Payment Messaging System Operator; Card Scheme Operator; Payment Switching and Clearing System Operator. Under the current Regulations, only four licence categories are subject to minimum capital requirements: electronic retail payment service providers, e-money issuers, small e-money issuers, and designated payment instrument issuers.  

Minimum capital requirements are the key indicators of safe banking for microfinance institutions. This is because these institutions take money from depositors to run their business, so depositors need assurance that their money will be safe. The minimum capital requirement, which comprises money put up by shareholders, is used to assure customers that their money will not be used to settle debts, claims, or insolvency liabilities.  

In comparison with the current Regulations, the Bill appears to have expanded the minimum capital requirement to non-bank operators within the national payment system ecosystem. Card scheme operators such as Visa, Mastercard, and UnionPay, among similar entities, facilitate electronic payments using credit, debit, and prepaid cards and do not move money. Settlement occurs between issuing and acquiring banks, not through the scheme operator’s balance sheet. On that basis, the Bill’s proposed KSh 50 million minimum capital requirement for card scheme operators is uncorrelated with the operator’s actual risk profile, since the operator carries no direct custodial or credit exposure to customer funds that would justify capital adequacy rules for banks or microfinance banks. 

By contrast, the Bill proposes a minimum capital requirement of five million for Payment Initiation Service Providers, which is more commensurate with the risk involved. A payment initiation service is defined under the Bill as an open finance service that enables users to initiate online payments without directly interacting with their bank, with the provider accessing and processing payments on the customer’s behalf. Because such providers handle payment instructions and, depending on design, may be involved in the flow of funds, capital requirements are deemed appropriate.   

Conclusion  

The Bill’s extension of minimum capital requirements to non-bank operators reflects a broader regulatory instinct to impose “skin in the game” across the payment ecosystem. This is not an argument against prudential oversight of non-bank operators. Operational resilience, cyber-risk management, and systemic-importance obligations are legitimate regulatory concerns for card scheme and switching operators, given their central role in payment transactions.  

The concern is, however, with the purpose of capital requirements as loss absorbers for customers’ deposits and with applying the same to operators whose systems are not designed to hold customers’ deposits. This simply imposes a compliance burden that does not match the actual risk posed.