The Central Bank of Kenya (CBK) is set to grant payment licences to fintech startups, marking a significant policy shift that will open East Africa’s largest payments market. Companies like Flutterwave and Chipper Cash are eagerly awaiting these licences.
CBK Governor Kamau Thugge announced that the bank is working tirelessly to update the National Payment Systems Act of 2011. These updates will provide a legal framework for fintech companies to operate. This move could greatly benefit remittance and payment providers who have previously faced legal challenges and accusations of money laundering by Kenyan authorities.
The planned changes to the National Payment Systems Act aim to clear up legal uncertainties that have hindered fintech growth in Kenya, allowing traditional banks and telecom companies to dominate the market.
“We are in the process of updating and amending the Payments Act, basically coming up with a new act. We hope to be able to finish that soon and also the regulations and that would guide our way forward in terms of payments service providers space,” said Governor Thugge during a press briefing, in response to a question about the registration status of Flutterwave and Chipper Cash.
Currently, Kenya’s financial sector is governed by the Central Bank of Kenya Act, the National Payment Systems Act, and regulations from 2013 and 2014. These laws are vague regarding fintechs, leading to conflicts with authorities. Law enforcement agencies like the Financial Reporting Centre (FRC) and the Asset Recovery Authority (ARA) have frozen accounts and seized assets of fintech companies over money laundering allegations.
In 2022, the CBK instructed local banks and mobile money providers to sever ties with fintechs, citing undefined threats to the financial system. The regulator claimed that these firms were operating without proper authorization.
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