National Payment System Regulations, 2014

The National Payment System Regulations, 2014, are the principal subsidiary legislation made under the National Payment System Act 2011, and they operationalise the Act by setting out the detailed authorisation and oversight regime for payment service providers (PSPs) and payment systems in Kenya. They are the working rulebook for the licensing of payment businesses, including the mobile money operators that make Kenya one of the world's deepest mobile-payments markets. The Regulations provide for the authorisation of PSPs, the designation of payment systems and payment instruments, the conduct of business by PSPs, and anti-money-laundering measures. They establish categories of PSP activity and require any person providing payment services to be authorised by the Central Bank of Kenya (CBK) before commencing operations, subject to fit-and-proper, governance and operational requirements. A central feature is the protection of customer funds: the Regulations require PSPs to hold customer funds in trust in accounts with strong, prudentially regulated banks, to keep those funds segregated from the PSP's own funds and beyond the reach of its creditors, and they prohibit the lending or investment of customer funds. The Regulations impose record-keeping, reporting and audit obligations, technology and security standards, outsourcing and agent-management requirements, and consumer-protection duties including disclosure, complaint handling and dispute resolution. They give the CBK powers of inspection and supervision and provide for sanctions, including penalties and the suspension or revocation of authorisation. Because they sit beneath the NPS Act 2011 and are read together with the E-Money Regulations 2013, they form the core of the regulatory perimeter for retail and mobile payments in Kenya. They are the instrument most directly relevant to a fintech seeking to operate payment services in the country.

1. 1Operationalise the NPS Act 2011: detailed PSP authorisation and oversight regime
2. 2Mandatory CBK authorisation before providing payment services, with fit-and-proper and governance tests
3. 3Customer funds held in trust with strong prudentially-regulated banks, segregated, not lent or invested
4. 4Designation of payment systems and instruments; conduct-of-business and AML requirements
5. 5Record-keeping, reporting, audit, technology/security, outsourcing and agent-management obligations
6. 6CBK inspection, supervision and sanctions including suspension/revocation