How to Apply for a Kenyan Payment Service Provider (PSP) Licence

How to Apply for a Kenyan Payment Service Provider (PSP) Licence

If your business handles customer payments, issues e-money, or operates a digital wallet in Kenya, you need a Payment Service Provider licence from the Central Bank of Kenya (CBK). The licence is issued under the National Payment System Act 2011 and NPS Regulations 2014. This is not a quick process—expect 4 to 9 months from start to authorization.

Who Needs a PSP Licence?

Any company offering electronic payment processing, mobile money services, digital wallets, or merchant acquiring services to Kenyan users must obtain a PSP licence. This includes foreign companies serving Kenyan residents remotely.

The exception: if you only build payment software or integrations—you handle no customer funds yourself—you may avoid licensing by working with licensed PSPs. Payment integration experts on Kaziiko can advise on your specific model.

PSP Licence Categories and Capital Requirements

The four main licence types, with their statutory minimum core capital, are: Electronic Retail Payment Service Provider (KES 5 million), E-Money Issuer (KES 20 million), Small E-Money Issuer (KES 1 million), and Designated Payment Instrument Issuer (KES 50 million). Choose the category that matches your actual service, not the lowest capital threshold.

Capital must be held in a Kenyan bank and proven with bank statements, government treasury bills, or bonds. These are statutory minimums and do not include the cost of establishing the company, appointing personnel and trustees, developing the technology, securing bank and vendor arrangements, conducting systems and security audits, or preparing the application and compliance framework.

The Application Process, Step by Step

Step 1: Name Approval (4–8 weeks)

Submit three proposed names to the CBK for approval before any company registration. You can submit proposed names in order of preference through the online portal at https://gdi.centralbank.go.ke/ui/nameapproval/.

Once the CBK has approved the name, register your Kenyan entity with the Business Registration Service.

Step 2: Preliminary Meeting with CBK

Initiate contact with the CBK National Payments System Department at nps@centralbank.go.ke and attend a preliminary meeting to confirm licensing requirements for your specific business model. This meeting helps clarify which category suits you and what supporting documents you need.

Step 3: Prepare and Submit Your Application

You will need a comprehensive business plan, AML/KYC policy, IT security framework, board and management CVs, fit and proper declarations, capital evidence, and Service Level Agreements with all partnering institutions.

The formal application uses Form 1 in the First Schedule to the National Payment System Regulations, 2014, accompanied by a covering letter summarising the applicant and the authorisation sought, a sworn affidavit in the prescribed form, a detailed business plan, the supporting application documents and the applicable non-refundable application fee. The application fee is KES 5,000.

Submit your application to the Director, Banking Services, NPS & Risk Management Department, Central Bank of Kenya. Check nps@centralbank.go.ke for the current mailing address and payment account details.

Step 4: CBK Review and Authorization Fees

The CBK may request additional information. Upon satisfaction, the CBK issues a Letter of Intent requesting the KSh 100,000 authorisation fee. The Authorization Certificate is issued within 7 days of payment of the authorisation fee.

The CBK may request clarifications or conduct on-site visits to verify your technical setup. Delays are common. Budget extra time and keep your contact details current so the CBK can reach you quickly.

What the CBK Checks

Your business plan must show profitability, market demand, and competitive edge. Prove your team has genuine payment systems experience—not just business degrees.

Technical documentation must detail transaction processing, data security, fraud prevention, disaster recovery, and customer complaint handling. Security gaps will block your application.

You also need customer agreement templates, merchant agreements, and detailed arrangements for holding customer funds in trust with a local bank. The CBK wants to know exactly how you will safeguard money if your company fails.

You must also demonstrate compliance with Kenya's data-protection framework, which may require controller or processor registration, privacy notices, lawful-basis mapping, processor contracts, cross-border transfer safeguards, retention rules, data-subject procedures and a data protection impact assessment for high-risk processing.

What Happens After Approval

Once you hold your PSP licence certificate, you may launch payment services. But licensing is not the end. You must comply with CBK's ongoing reporting, capital adequacy, transaction limit, AML/CFT, and customer protection rules. Annual supervision fees apply. Fintech experts on Kaziiko can help you budget and structure your compliance costs.

Operating without a licence or offering services outside your approved category is a criminal offence. Operating as an unlicensed PSP in Kenya is illegal under the National Payment System Act 2011. Consequences include significant fines, forced shutdown of operations, and personal liability for directors.

Frequently Asked Questions

What is the total cost to apply?

The application fee is KES 5,000 and the authorisation fee is KES 100,000. You must also hold the minimum core capital for your category in a bank account. These are just regulatory fees; real costs are much higher when you add legal advice, technical security audits, trustee fees, bank arrangements, and staff time.

Can I operate while my application is being reviewed?

No. You cannot accept or handle customer funds until the CBK issues your Authorization Certificate. Doing so is illegal. Wait for final approval before launch.

How long does licensing actually take?

The full process typically takes 4 to 9 months, with preparation and name approval taking 4 to 8 weeks. This assumes you prepare documents carefully and respond quickly to CBK requests. Gaps or slow responses can add months.

What if my application is rejected?

The CBK will explain why. You can address those issues and reapply, but you must make substantial changes—minor fixes rarely succeed. Find a verified Kenyan expert on Kaziiko who has guided PSP applicants to understand what the CBK wants and what your gaps are.