Central Bank of Kenya (CBK)

Overview

The Central Bank of Kenya (CBK) is Kenya's apex monetary authority and the primary regulator of the banking sector, payment systems, and financial market infrastructure. Established in 1966 following the dissolution of the East African Currency Board (EACB), the CBK operates under the Central Bank of Kenya Act (Cap 491) and maintains a mandate to formulate and implement monetary policy to achieve price stability, promote financial stability, maintain effective payment systems, and serve as banker and adviser to the Government of Kenya.

The CBK is particularly notable for its early pioneering approach to mobile money regulation, having issued the foundational framework that enabled M-Pesa's emergence as a global model for mobile payment systems. Today, the CBK exercises comprehensive oversight of Kenya's payment systems, banking institutions, and increasingly, digital financial services and fintech providers.

Key Facts:

• Jurisdiction: National (Kenya)
• Regulatory Scope: Monetary policy, banking supervision, payment systems, foreign exchange, currency issuance
• Regulatory Authority Level: Layer 1 (Binding, National-Level Authority)
• Governor: Dr. Kamau Thugge (appointed June 19, 2023)
• Deputy Governors: Dr. Susan Koech and Gerald Nyaoma (appointed December 2024)

Kenya's National Payment Systems Infrastructure

KEPSS (Kenya Electronic Payment and Settlement System)

Overview:

The Kenya Electronic Payment and Settlement System (KEPSS) is Kenya's real-time gross settlement (RTGS) infrastructure, operated by the CBK. KEPSS enables high-value, time-critical transactions with immediate and final settlement.

Technical Specifications:

• Type: Real-Time Gross Settlement (RTGS)
• Operating Hours: 24/7, all days of year
• Settlement: Irrevocable, immediate upon receipt
• Transaction Limit: High-value transactions, typically institutional payments
• Status: Operational and upgraded with modern technology standards

PesaLink — Kenya's Instant Interbank Payment System

Launch Date: 2017

Current Status: Leading regional instant payment system in East Africa

Operating Entity: Integrated Payment Services Limited (IPSL) — owned by Kenya Bankers Association

PesaLink Network Profile

PesaLink Performance (2024)

• Daily Transaction Volume: Millions of transactions processed daily
• Institutional Adoption: Enterprise-to-enterprise (B2B) payments expanding
• Use Cases: Salary payments, supplier payments, merchant settlements, bill payments
• Market Position: Africa's most mature retail instant payment system

PesaLink Recent Developments (2024-2025)

Merchant Payment Integration:

• PesaLink expanding into merchant acquiring space (January 2024)
• Direct integration with point-of-sale (POS) networks
• Potential to challenge M-Pesa's merchant payment dominance through lower fees

M-Pesa Integration Proposal:

• Joint proposal from Safaricom and KBA to CBK (2024-2025)
• Objective: Direct integration of M-Pesa with PesaLink infrastructure
• Cost Benefit: KES 10,000 transfer via M-Pesa: ~KES 100 fee vs. PesaLink: KES 30-50
• Expected Impact: Increased interoperability, cost reduction for consumers
• Status: Under CBK review for regulatory approval

M-Pesa — Kenya's Dominant Mobile Money System

Overview:

M-Pesa, operated by Safaricom, is the world's leading mobile money platform and has defined Kenya's digital finance sector for over 15 years.

M-Pesa Market Position (2024)

M-Pesa Service Offerings

• Peer-to-peer (P2P) money transfers
• Merchant payment acquiring
• Bill payments (utilities, insurance, school fees)
• Airtime purchases
• Loan disbursement and repayment
• Savings and investment products (M-Pesa Save, M-Pesa Invest)
• International money transfers (via partnerships)

M-Pesa Regulatory Framework

CBK Oversight:

• Licensed as electronic money issuer under E-Money Regulations (2013)
• Mandatory customer fund segregation in regulated financial institutions
• Real-time transaction monitoring and AML/CFT compliance
• Consumer protection requirements (dispute resolution, transparency)

Kenya's Payment Rails Integration Ecosystem

Real-Time Payment System Maturity (2024)

Proposed Integration (2024-2025)

M-Pesa + PesaLink Direct Connection:

• Would enable M-Pesa users to transfer directly to bank accounts via PesaLink infrastructure
• Reduce transaction costs through direct interbank clearing
• Leverage PesaLink's 24/7 instant settlement capability
• Expected to reduce merchant payment friction

Technical Roadmap:

• API-based integration between Safaricom and PesaLink
• Real-time fund routing between M-Pesa wallet and PesaLink network
• Unified merchant acquiring platform
• Status: Under regulatory review by CBK

Mobile Money and E-Money Regulation

E-Money Regulatory Framework (2013, Updated Ongoing)

License Requirements:

• E-money issuer license from CBK
• Minimum capital requirements
• Liquidity reserves (customer fund segregation requirement)
• Security and cybersecurity standards
• AML/CFT compliance

Consumer Protections:

• Transaction transparency and confirmation
• Data privacy and protection
• Dispute resolution mechanisms
• Fund protection through custodial banking arrangements

Payment Service Provider Authorization

National Payment System Regulations 2014:

All payment service providers must:

• Meet fit-and-proper person standards for management/ownership
• Maintain minimum capital and liquidity (proportionate to transaction volume)
• Implement AML/CFT compliance aligned with FATF standards
• Establish consumer complaints resolution mechanisms
• Provide transparent fee structures and transaction information
• Comply with data protection and cybersecurity standards

Licensed Payment Service Providers (2024)

CBK Digital Currency and Innovation Initiatives

Central Bank Digital Currency (CBDC) — Digital Shilling Initiative

Current Position (2025):

• CBK determined that "pain points" in Kenya's payment systems can be addressed through innovations within existing ecosystem
• Assessment: CBDC is "not a compelling priority" for Kenya given mature mobile money and instant payment infrastructure
• Strategic Position: CBK remains open to CBDC exploration if infrastructure gaps emerge or cross-border payment friction increases
• Focus Area: Enhancing existing payment rails rather than pursuing CBDC deployment

Cryptocurrency and Virtual Assets Regulation

Regulatory Evolution (2018-2025):

Phase 1 — Caution (2018):

• CBK cautioned against virtual currency use as legal tender
• Cited concerns: lack of traceability, speculative valuation, regulatory gaps

Phase 2 — Balanced Regulation (2024-2025):

• Active engagement with lawmakers on balanced crypto regulation
• Enabling innovation while maintaining financial crime safeguards

Emerging Framework (December 2024-January 2025):

Draft National Policy on Virtual Assets and Virtual Asset Service Providers:

• Comprehensive regulatory framework for digital asset services
• Licensing requirement for all virtual asset exchanges, wallet providers, and trading platforms

Virtual Asset Service Providers Bill (Parliamentary Review 2025):

• Primary Regulators: CBK and Capital Markets Authority (CMA)
• Licensing: Required for all exchanges, wallet providers, trading platforms
• Compliance: Mandatory AML/CFT standards aligned with FATF recommendations
• Consumer Protection: Requirements for custody transparency, trading safeguards, valuation standards
• Operational Resilience: Cybersecurity and disaster recovery standards

Payment Systems Governance and International Coordination

Central Bank Participation in International Forums

International Monetary Fund (IMF):

• Technical assistance through East African Regional Technical Assistance Centre (East AFRITAC)
• IMF Article IV consultations and financial sector assessments
• Capacity building on payment system modernization

Financial Stability Board (FSB):

• Alignment with FSB standards on prudential regulation
• Participation in FSB-coordinated early warning exercises

Bank for International Settlements (BIS):

• Access to BIS payment systems infrastructure
• Participation in central bank governance forums
• Payment systems committee engagement

Regional Coordination (East Africa)

East African Central Banks Coordination:

• Coordination with central banks of Tanzania, Uganda, Rwanda on regional payment systems
• Monetary policy harmonization discussions
• Cross-border payment infrastructure development

Supervisory Colleges:

• Convenes supervisory colleges for systemically important banking groups
• Enhanced information sharing with home and host country regulators
• Coordinated oversight of cross-border banking operations

Financial Sector Stability Reporting

• Bi-Annual Financial Sector Stability Reports in collaboration with other Kenyan regulators
• Systemic risk assessment and regulatory response coordination
• Public disclosure of financial sector health indicators

Consumer Protection and Regulatory Standards

Prudential Guidelines Framework

Key Standards (Updated 2024):

Transparency Requirements:

• Clear disclosure of fees, interest rates, and terms before service provision
• Fair, clear, and non-misleading marketing materials
• Plain-language account statements and transaction confirmations

Complaint Resolution:

• Designated complaint officers at each institution
• Formal complaints procedures with specified response timelines (typically 14-30 days)
• Escalation to CBK if internal resolution fails

Fair Lending and Conduct Standards:

• Prohibition of unfair or deceptive practices
• Responsible lending standards
• Protection against abusive collection practices

Digital Payments Consumer Protection (2024-2025)

Enhanced Rules for Mobile Money and Digital Services:

• Enhanced dispute resolution procedures for digital transactions
• Real-time transaction reversal capabilities
• Fraud liability protection frameworks
• Data protection and cybersecurity incident notification

Non-Deposit Taking Credit Providers (NDTCP) Regulation

Draft Framework (December 2024):

• Central Bank of Kenya (Non-Deposit Taking Credit Providers) Regulations 2025
• Applies to fintech lenders and alternative credit providers
• Consumer protection requirements including:
• Transparent transaction information
• Fair treatment standards
• Formal complaint resolution mechanisms
• Responsible lending requirements
• Interest rate and fee disclosure

AML/CFT Compliance Standards

Implementation Framework:

• FATF standards compliance for all payment service providers
• Real-time transaction monitoring systems
• Beneficial ownership verification procedures
• Sanctions screening and OFAC integration
• Suspicious activity reporting (SAR) protocols

Basic Identity (Consolidated)

Legal Foundation

Primary Statutes:

1. Central Bank of Kenya Act (Cap 491) — Foundational statute establishing CBK with explicit payment systems oversight mandate (amended 2003)
2. Banking Act (Cap 488) — Legal framework for banking supervision, capital requirements, institutional governance
3. National Payment System Act, 2011 (No. 39 of 2011) — Designates CBK as sole payment systems regulator
4. National Payment System Regulations, 2014 — Detailed provisions for PSP authorization, AML/CFT, system designation
5. E-Money Regulations (2013) — Electronic money issuer licensing and operational requirements
6. Guidelines for Payment Service Provider Authorization (2014) — PSP eligibility and competency standards

Contact Information

Headquarters:

Haile Selassie Avenue

P.O. Box 60000 – 00200

Nairobi, Kenya

Phone:

• Main Switchboard: +254 20 286 1000 / +254 20 286 3000
• General: +254 709 081 000 / +254 709 083 000
• Fax: +254 20 286 0000

Email: [email protected]

Official Website: https://www.centralbank.go.ke

Payment Systems Resources:

• Payment Systems Information: https://www.centralbank.go.ke/national-payments-system/
• Banking Contacts: https://www.centralbank.go.ke/contact-us/bankingcontacts/

Document Control

• File Identifier: A154b-KE-NAT-central-bank-of-kenya.md
• Version: 2.0 — Enhanced Payment Systems Intelligence
• Created: April 5, 2026
• Last Updated: April 6, 2026
• Confidence Score: 95%
• Status: Ready for Publication
• Supersedes: A154-KE-NAT-central-bank-of-kenya.md (Version 1.0)

Classification

Inclusion Justification

What This Entity Oversees

Content covered within the payment systems intelligence sections of this document.

Regulatory Powers

Content covered within the payment systems intelligence sections of this document.

Regulatory Role and Function

Licensing and Authorization Relevance

Content covered within the payment systems intelligence sections of this document.

Payments and Money Movement Relevance

Content covered within the payment systems intelligence sections of this document.

Payment Systems Governed or Overseen

Content covered within the payment systems intelligence sections of this document.

Relationship to Other Regulators

Content covered within the payment systems intelligence sections of this document.

Geography and Jurisdiction Notes

Important Departments and Divisions

Content covered within the payment systems intelligence sections of this document.

Key Public Resources

Notes on Naming and Language