The National Treasury and the Central Bank of Kenya (CBK) published the draft National Payment System Bill, 2026 on September 21, alongside a companion policy document, opening a public comment window that closes October 9. The bill would repeal the National Payment System Act (Cap. 491A), which has governed Kenya's payments since 2011 — the law that predates most of the fintech sector it now regulates. The rewrite is overdue. The mechanism it chooses to modernize the sector, however, sets up a direct trade-off between systemic safety and market entry that the drafters have resolved almost entirely in favor of incumbents.
What the Bill Actually Requires
The core mechanism is a tiered minimum core-capital schedule: KES 5 million (~$38,610) for basic data services up to KES 250 million (~$1.93 million) for electronic money issuers, with intermediate tiers for payment initiation and account information services (TechCabal). Firms holding multiple licenses must post 100% of the highest applicable tier plus 50% for each additional category — a stacking rule that compounds cost for any startup trying to bundle services rather than pick one narrow lane.
Critically, the bill defines qualifying core capital narrowly: "fully paid-up ordinary share capital and disclosed reserves," explicitly excluding shareholder loans, convertible debt, and other borrowed funds. That single clause matters more than the headline number. Early-stage fintechs routinely bridge growth with shareholder notes or convertible instruments precisely because polished equity rounds take time institutional capital doesn't always keep pace with. Existing providers get one year post-enactment to comply, per CBK guidelines.
A second, less-discussed pillar of the bill would mandate open finance: payment providers must build systems capable of securely sharing customer data with licensed third parties once customers consent, with CBK empowered to compel that sharing (TechCabal). That provision could meaningfully loosen banks' and M-PESA's grip on customer relationships — a genuinely pro-competitive move sitting inside the same bill that raises the capital wall.
The Case for the Wall
The capital requirement isn't arbitrary caution. Kenya's mobile money ecosystem is enormous — 53.4 million subscriptions and 100.1% penetration as of the most recent Communications Authority reporting period (Communications Authority of Kenya) — which means an undercapitalized e-money issuer failing mid-operation doesn't just burn investor money; it strands consumer float that ordinary Kenyans depend on for daily transactions, remittances, and merchant payments. Capital floors are a standard prudential tool internationally: the EU's e-money regime, Nigeria's CBN tiers, and Kenya's own bank capital rules all use minimum core capital to ensure a firm can absorb losses and make customers whole before insolvency proceedings even start. Excluding debt from qualifying capital also has a real rationale — shareholder loans can be called or restructured under stress in ways that paid-up equity cannot, which is exactly the wrong property for capital meant to be loss-absorbing. A regulator writing rules for money-transmission infrastructure that already moves trillions of shillings a year is not wrong to demand that the firms holding it can survive a shock.
Where the Design Overshoots
The problem is proportionality, not the principle. The bill's own stated purpose is to "promote market integrity, encourage innovation and competition" — language the capital schedule works against for the tier of firm least able to absorb it. A $1.93 million floor, funded exclusively by paid-up equity, is a nontrivial ask for a pre-revenue payments startup anywhere; in Kenya's funding environment it is close to prohibitive for a bootstrapped team. Commercial banks entering the payments space clear this bar almost by default, since they already hold regulatory capital and simplified CBK authorizations for other lines of business. The result isn't a level competitive field with a safety threshold — it's a threshold sized to what an incumbent already has on its balance sheet.
The bill's regulatory sandbox carve-out is presented as the release valve for this tension, letting firms test products without a full license upfront. But a sandbox that lets you pilot a product is not the same as a pathway that lets you scale one — at some point every successful sandbox graduate hits the same $1.93 million wall the sandbox was meant to help them avoid. Without a graduated or time-limited lower tier for firms below a certain transaction volume, the sandbox defers the entry barrier rather than removing it.
A cleaner design would keep the loss-absorbing principle — capital genuinely at risk, not debt that evaporates under stress — while scaling the threshold to transaction volume or float held, the way several emerging-market regulators tier requirements by activity rather than by license category alone. That would preserve consumer protection for the segment that actually poses systemic risk without pricing out the smaller players whose competition is precisely what disciplines M-PESA's 88%-plus share of the market and keeps fees down for everyone else.
The comment window runs through October 9. Kenya's fintech associations and the sandbox cohort CBK itself has cultivated over the past several years have three weeks to make the case for a graduated capital tier before this becomes law with only cosmetic changes.