The Central Bank of Kenya (CBK) plans to revise the Payment Systems Act to improve the regulatory framework and foster innovation in the country’s financial sector. These changes are a key step in enhancing Kenya’s status as a prominent financial centre in Africa.
In a statement released today, the CBK outlined the key objectives of the amendments, which include increasing transparency, improving consumer protection, and fostering a more competitive environment for payment service providers.
“These amendments are crucial for the modernization of our payment systems infrastructure,” said Dr. Patrick Njoroge, Governor of the Central Bank of Kenya. “By updating the Payment Systems Act, we aim to create a more secure, efficient, and inclusive financial ecosystem that can support the dynamic needs of our economy.”
One of the significant changes in the proposed amendments is the introduction of stricter licensing requirements and operational guidelines for payment service providers. This is expected to ensure higher standards of service and security, protecting consumers from fraud and enhancing the overall reliability of digital payment systems.
Additionally, the amendments will address the integration of new financial technologies, such as blockchain and digital currencies, into the regulatory framework. This move is anticipated to encourage innovation and attract more fintech investments into the country.
“We recognize the rapid advancements in technology and the increasing adoption of digital payment solutions,” Dr. Njoroge continued. “Our regulatory framework must evolve to accommodate these changes, ensuring that we can harness the benefits of innovation while mitigating associated risks.”
The CBK has invited stakeholders, including financial institutions, fintech companies, and consumer advocacy groups, to participate in a public consultation process. This process will allow for comprehensive input and feedback on the proposed changes before they are finalized.
Financial analysts have welcomed the CBK’s initiative, noting that the amendments could significantly enhance the efficiency and security of Kenya’s payment systems. “This is a timely and necessary update to Kenya’s financial regulations,” said Grace Muthoni, a financial analyst at ABC Capital. “It positions Kenya to better manage the risks and opportunities presented by the digital transformation of financial services.”
The amendment of the Payment Systems Act comes at a time when Kenya is experiencing rapid growth in digital financial services. Mobile money platforms, such as M-Pesa, have revolutionized the way Kenyans transact, making financial services more accessible to millions of people, particularly in underserved areas.
By strengthening the regulatory framework, the CBK aims to build on these successes and ensure that the benefits of digital finance are widely shared while maintaining the integrity and stability of the financial system.
The proposed amendments will be presented to the Kenyan Parliament later this year. If approved, they will mark a significant milestone in the ongoing efforts to modernize Kenya’s financial sector and enhance its global competitiveness.
As Kenya continues to lead in financial innovation, the updated Payment Systems Act is expected to play a pivotal role in shaping the future of the country’s financial landscape, fostering growth, and ensuring that the financial system remains resilient and inclusive.
