Kenya's New Bill Raises Capital Requirements for Payment Firms

The proposed National Payment System Bill in Kenya introduces substantial capital requirements for payment companies, mandating core capital ranging from KES 5 million ($39,000) for basic data services to KES 250 million ($1.93 million) for electronic money issuers. The bill, published on Monday, stipulates that the required capital must come from fully paid-up shares and disclosed reserves, excluding founder loans, borrowed money, and convertible debt.

Companies holding multiple licenses may face even higher capital demands, with an electronic money issuer also operating an electronic wallet potentially needing KES 275 million ($2.1 million). The bill aims to change the landscape of Kenya's payment market, which has traditionally allowed smaller startups to enter and grow.

Under the new rules, equity financing will become more crucial for startups seeking licenses, as alternative funding methods will not count towards the capital threshold. Existing providers will have one year to comply with these new requirements.