Skip to content

Kenya: The High Court upholds wide interpretation of Payment Service Providers

28 October 2022
– 2 Minute Read


The High Court has held that regulation of payment service providers (PSPs) by the Central Bank of Kenya (CBK) under the National Payment Systems Act, 2011 (the NPS Act) extends to any person engaged in any process in a payment system. A payment system is widely defined under the NPS Act as a system or arrangement that enables payment.

In Kenya Commerce Exchange Service Bureau Limited (KENEX) v Central Bank of Kenya (Constitutional Petition E181 of 2021) [2022] KEHC 13189 (KLR), KENEX challenged the CBK’s circular dated 17 May 2021 (the Circular) to banks in relation to connectivity to SWIFT and back-up for business continuity.

KENEX argued, among other things, that it is not a PSP as its role is limited to providing software solution that connects banks to SWIFT. It stated that it does not send or receive payment messages neither does it process payments on behalf of banks and is not therefore subject to regulation by the CBK under the NPS Act. 

The Court held that the definition of a PSP under the NPS Act does not limit a PSP to one who sends or receives messages or processes payments or other messages on behalf of the banks. As KENEX’s platform (through SWIFT) was used by banks to send and store messages or make payments, KENEX could not dissociate itself from the payment process and fell within the definition of a PSP.

This judgement upholds:

  • the wide interpretation of the definitions of a PSP which captures any person who provides any service in connection with electronic payments. Providers of payment platforms or other services in connection with electronic payments therefore need to review their compliance with the NPS Act;
  • CBK’s Circular to banks on connectivity to SWIFT and back-up for business continuity; and 
  • the CBK’s wide regulatory mandate with respect to banking and payment services.