The draft National Payment System Policy, August 2026 (the Policy) represents an important forward-looking effort to navigate the paradox of Kenya’s success, where dominant first movers exploit persistent network effects, disadvantaging consumers and complicating regulatory supervision.
My comments below highlight the key gaps, to help strengthen the Consequential changes in the proposed National Payment System Bill, 2026, are also needed.
1. Purpose of the new Policy. The document as a whole articulates a compelling vision for the future of Kenya’s payments ecosystem, particularly in the Foreword and Executive Summary. However, Sections 1.2 and 1.3, which should establish the formal policy rationale, focus predominantly on summarizing the existing gaps, regulatory enhancements, and alignment with international standards. While these are important considerations, they do not convey the broader strategic imperative. The rationale could be strengthened by more explicitly framing the Policy as a vehicle for future-proofing Kenya’s payments ecosystem, positioning the country to respond proactively to technological, market, and geopolitical developments.
2. Connection with earlier policy statements. The proposed Policy appears to be the successor of the “National Payments Strategy 2022-2025” but this is not stated explicitly or explained. It is not explained how this Policy relates to and connects with other blueprints, including the “National Digital Master Plan (2022–2032)” and “Kenya National Financial Inclusion Strategy (NFIS) 2025–2028.” It should be clarified whether the proposed Policy replaces those policy statements, and how it builds on them if at all. The risk here is ending up chasing multiple rabbits.
3. What are the principles to guide future choices? The Policy provides a clear statement of desired outcomes but does not clearly articulate the principles that should guide future implementation and design choices. This is a critical omission as policymakers will face a range of alternatives as the payments ecosystem evolves, including different models for instant payments, interoperability, governance, and infrastructure. Different design choices can have significant long-term implications for competition, innovation, interoperability, resilience, efficiency, and market structure. While it is neither necessary nor desirable for the Policy to predetermine these choices, it could establish a clearer set of principles against which competing options should be assessed. Such principles would help ensure that future implementation decisions remain consistent with the overarching objectives of the Policy.
4. What is the Government’s role in the payments ecosystem? The Policy leaves open an important governance question—what role should the public sector play as a market participant, as distinct from its roles as policymaker and regulator? Given that Kenya’s legal framework is built around CBK’s oversight of both public and private payment systems, the Policy should clearly articulate the principles governing any future direct government involvement in payment service provision or payment infrastructure.1 Such clarification would enhance institutional coherence and provide greater certainty for market participants. The design of the forthcoming instant payment infrastructure will probably be the first test case for the applicability of these principles and an important strategic decision.
5. Identity and Consumer Consent. While the Policy acknowledges the need for a robust Digital Public Infrastructure (DPI), it gives limited attention to two foundational pillars: digital identity and consumer consent. The Policy could more explicitly recognize the importance of a unique, verifiable, and privacy-preserving digital identity framework for all users, together with clear authorization and consent mechanisms supported by appropriate regulatory safeguards. These pillars are essential for secure, interoperable, and consumer-centric digital payment services. As the ecosystem develops, Kenya should seek alignment with globally recognized standards and best practices to ensure that its payments ecosystem remains interoperable, trustworthy, and future-ready. The next-generation payments ecosystem requires identity modernization, and consumer data shall be shared only with the explicit, informed, and revocable consent of the customer.
6. Solving consumers’ greatest pain points. From a consumer perspective, the key concerns in the payments ecosystem are fraud, affordability, and the privacy of personal information. While the Policy acknowledges some of these issues, its treatment remains relatively high level. In particular, given the persistence of payment-related fraud despite existing legal and regulatory protections, the Policy could more clearly articulate the principles that should govern fraud prevention, liability, and consumer redress. It could also provide a stronger statement of the principles governing the collection, use, and protection of consumer data. Doing so would strengthen the consumer protection dimension of the Policy and provide clearer guidance for future implementation.
7. Financial inclusion bottlenecks. Along with similarly situated countries, four factors restrict the expansion of Kenya’s financial inclusion: poor rural connectivity, restrictive social norms especially affecting women, lack of identification among youth and marginalized citizens, and the prohibitive cost of mobile devices and services. The Policy should explicitly recognize these structural bottlenecks and seek their resolution.
8. Managing conglomerates. Despite the strong effort to deal with interoperability, a significant loophole is that vertically integrated groups may implement discriminatory pricing, disadvantaging external rivals relative to intra-group competitors, distorting market competition. Keeping the governance and operations of payment service providers (PSPs) separate from the rest of the group should therefore be underscored, which also clarifies CBK’s regulatory perimeter. Additionally, services to third parties should be on fair, reasonable, and nondiscriminatory terms.
9. Agent interoperability. The Policy is silent about agent sharing, which remains a persistent concern. An interoperable agent network would allow customers to conduct cash-in and cash-out transactions at any authorized agent regardless of their service provider, while enabling agents to benefit from more efficient management of their combined float. The Policy could more explicitly recognize agent interoperability as a desirable objective within the broader interoperability agenda.
10. “Bonus payouts” to wallet holders. The Policy and the National Payment System laws should be amended to explicitly require regular distribution of bonus payouts beyond the operational costs and related expenses of the Trust. This aligns to the reality of wallets as customer’s legal financial property and the practice in other countries, e.g., Tanzania, Uganda, and Ghana. Kenya’s PSPs have from the outset channeled these returns into charitable causes, a practice that remains a holdover from the industry’s nascent phase. Expectations that the total holdings in wallets would be small were overtaken and fears about competition with banks have dissipated.
11. Offline payments. While the Policy underscores the resilience of payment systems, it does not mention developing secure offline payments mechanisms so that people and businesses can still make payments even if networks are unavailable as in the case of significant outages. This is a major vulnerability given the widespread use of mobile payments. This capability is already in use in leading payments systems.
Dr. Patrick Njoroge, Former Central Bank of Kenya Governor
September 28, 2026
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