Regulation and Policy in Kenya’s Digital Banking Space
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Kenya’s digital banking sector has evolved rapidly since the launch of M-PESA in 2007. The country’s mobile-first approach has brought millions into the formal financial system, with over 83% of adults accessing formal services via mobile platforms in Kenya.
As mobile money, digital credit, and online payments expand, regulation has become central to maintaining trust, protecting consumers, and preserving financial stability.
The Central Bank of Kenya (CBK) serves as the primary regulator of digital financial services. It operates under the National Payment System Act, 2011 and the National Payment System Regulations, 2014.
These laws provide the foundation for payments oversight and align with the country’s Vision 2030 and Digital Economy Blueprint. The CBK’s regulatory approach aims to balance innovation with security, ensuring that the rapid expansion of digital banking does not create systemic risks.
A central part of this framework is the Central Bank of Kenya’s NPS Vision and Strategy 2021-2025. This plan outlines the goal of creating a secure, efficient, and inclusive cash-lite economy.
It is guided by five principles, which include trust, security, usefulness, choice, and innovation, and is designed to build interoperability between mobile money platforms, electronic funds transfers, and real-time gross settlement systems such as the upgraded KEPSS platform.
Several measures have been implemented under this strategy. These include the adoption of ISO 20022 standards to enable richer transaction data, integration of e-KYC systems with national identification through Huduma Namba to reduce fraud, and transparent pricing rules for low-value transactions to make payments more affordable.
During the COVID-19 pandemic, transaction limits were temporarily raised to KSh 250,000, and 24/7 digital operations were expanded. Regional cross-border payment systems through EAPS and REPSS also grew stronger, supporting real-time transfers across markets.
The National Payments Strategy 2022-2025 builds on these foundations, focusing on expanding financial inclusion through shared infrastructure. It targets groups that have historically been underserved, such as women, youth, and informal sector workers, by addressing barriers like high transaction fees and system downtime.
The strategy requires full interoperability across person-to-person, merchant, and QR/NFC payments and strengthens consumer awareness campaigns to reduce exposure to scams and fraud.
In late 2024, regulatory developments intensified with the Business Laws (Amendment) Act, 2024, which took effect in December of that year. The law reclassified “Digital Lenders” as Non-Deposit-Taking Credit Providers (NDTCs), bringing fintech lenders, loan apps, buy-now-pay-later services, and peer-to-peer platforms under CBK’s direct licensing and supervision. As of September 2025, 153 digital lenders had obtained licenses.
The accompanying Draft NDTCP Regulations, 2025 introduce a structured governance framework. Lenders are required to hold at least KSh 20 million in capital for a full license and must implement robust risk management systems covering credit, operational, IT, and liquidity risks.
Enhanced anti-money laundering (AML) and countering the financing of terrorism (CFT) measures are also included, with stricter know-your-customer (KYC) procedures for non-face-to-face transactions.
Consumer protection has also been strengthened. The rules prohibit hidden fees, harassment in debt collection, and unauthorized sharing of personal contact information.
Licensed digital lenders must acknowledge customer complaints within seven days and resolve them within 30 days. These safeguards give borrowers more control over their data and more structured recourse when disputes arise.
These changes build on the 2022 Digital Credit Providers rules and reinforce data protection under the Data Protection Act, 2019. Borrowers can now opt out of marketing messages, and lenders face penalties for data misuse.
While compliance costs are expected to increase for providers, the regulatory clarity improves credibility, attracting more investment into the sector. Industry projections indicate that Kenya’s digital banking market could reach a value of US$14.54 billion by 2028, supported by strong policy and legal frameworks.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
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