Kenya is moving to overhaul its payment services regulations in a bid to provide clearer rules for financial technology companies, but proposed approval requirements could make it more difficult for startups to secure investment quickly.
The draft National Payment System Bill 2026, developed by the National Treasury and the Central Bank of Kenya (CBK), seeks to modernise the country’s payments framework, strengthen consumer protection and promote competition. However, provisions requiring regulatory approval for significant investments could introduce additional delays for fintech businesses seeking funding.
Under the proposed legislation, investors acquiring at least 10% of a licensed payment service provider or payment system operator would need prior written approval from the central bank. The draft also proposes regulatory oversight of mergers and acquisitions involving payment companies.
These requirements could affect how quickly startups complete fundraising rounds. Even after reaching an agreement with investors, companies might have to wait for regulatory clearance before receiving funds or finalising ownership changes.
For early-stage fintechs operating with limited cash reserves, such delays could create significant financial pressure. Businesses often depend on investment to recruit staff, develop products, expand into new markets and maintain daily operations. Uncertainty over when funding will arrive could force founders to postpone these plans.
The proposed rules could also influence investor decisions. Venture capital firms typically assess regulatory risks, potential returns and the time required to complete transactions before committing money. Additional approval procedures could increase legal costs and due diligence requirements, potentially making some investments less attractive.
According to reporting by TechCabal, investors have raised concerns that the proposed framework could increase the complexity of financing fintech businesses in Kenya. The absence of clearly specified decision timelines could make it harder for companies and investors to plan transactions.
Nevertheless, the reforms address longstanding regulatory challenges in one of Africa’s most prominent digital finance markets. Kenya’s fintech sector has expanded through mobile money, digital payments, lending platforms and cross-border transfers, but regulatory responsibilities have been spread across several laws and institutions.
The new framework aims to establish clearer licensing categories and strengthen oversight of payment providers. It also seeks to protect consumers, improve financial stability and create conditions for fairer competition.
Stronger regulation could benefit the industry over time by improving accountability and increasing confidence among customers, financial institutions and international investors. Clearer rules could also help legitimate businesses distinguish themselves from operators that fail to meet compliance standards.
The challenge will be balancing these protections with the need to encourage innovation. Publishing transparent approval criteria, setting firm processing deadlines and providing efficient digital application systems could help regulators review investments without unnecessarily slowing business activity.
Kenya’s proposed reforms therefore represent both an opportunity and a risk for its fintech ecosystem. A predictable regulatory environment could attract investment, but lengthy or uncertain approval processes could discourage investors and constrain startup growth.
As the bill progresses, its implementation will be critical. Kenya must ensure that stronger oversight supports financial security without undermining the speed and flexibility that have helped its fintech industry develop.
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