EBC Financial Group argues that Kenya’s draft payment rules could make remittances faster and better linked, but they would not on their own reduce the amount that senders have to pay.

Kenya’s proposed reform of its national payments system is mainly being talked about in terms of fintech, open finance, and competition. EBC Financial Group (EBC) observes that the less apparent question is what impact the reforms might have on the infrastructure responsible for carrying Kenya’s largest single source of foreign exchange: remittances from the diaspora.

EBC states that Kenya’s draft payment rules could make remittances faster and better linked, but they would not on their own reduce the amount that senders have to pay. A 2025 household survey referred to in the draft National Payment System Policy showed that 83.3% of the surveyed cash-remittance recipients identified high cost as their biggest challenge.

Remittance inflows over the past 12 months totalled about USD5 billion, 1.3% lower than a year earlier. The National Treasury and the Central Bank of Kenya (CBK) released the policy and the National Payment System Bill, 2026 on 21 September.

They propose higher capital for remittance providers, an instant payment switch, and rules for connecting payment systems. However, a transfer’s price is still subjected to provider fees, exchange rates, and taxes in the sending country. Comments will remain open until 9 October, with 11 public forums currently taking place.

David Precious, Senior Market Analyst at EBC Financial Group, said, “Diaspora transfers amount to approximately two months’ worth of Kenya’s imports. Higher costs may push some senders to informal channels that official data may not record, so Kenya end up with less foreign currency.”

Record August, but Lower 12-Month Total

According to CBK’s 18 September bulletin, Kenya received a record amount of USD451.8 million in August, which represents an increase of 6.0% compared to USD426.1 million a year earlier. However, one month does not show the trend.

Inflows over the 12 months to August totalled USD5.013 billion, down 1.3% and below the USD5.04 billion received in 2025. This means 2026 could be the first year of decline since 2009 if September to December inflows do not make up the gap. Based on CBK data, it seems that changes in some sending countries may explain part of the 12-month fall. Inflows from the US, about 48% of the total in the first half of 2026, fell 12.6% from a year earlier. A 1% US tax on cash-funded transfers took effect in January.

In April, CBK Governor Kamau Thugge cited weaker expected Middle East inflows and new Saudi transaction taxes when cutting the 2026 forecast. Because these taxes are set outside Kenya, they fall outside the Bill. However, the data do not show how much each factor explains.

What the Bill Proposes for Remittance Providers

Remittances are not merely an indirect beneficiary of the proposed reforms; the draft Bill introduces a specific licence category for Money Remittance Service Providers. It proposes to raise the minimum capital required of remittance providers from KSh20 million, as set out in the 2013 Money Remittance Regulations, to KSh30 million.

Smaller providers may find it harder to enter or stay in the market, because a higher capital requirement costs more to meet. This could lead to there being fewer providers, which in the end might impact competition, prices and access. At the same time, greater capital could also make the providers more financially stable and thus protect customers.

Speed and Interoperability Proposals

The draft policy further proposes a national instant payment switch, a system meant to complete everyday payments almost instantly. Meanwhile, the Bill proposes that payment providers and system operators use interoperable systems, allowing systems to send money to each other, and lets CBK require interoperability arrangements.

Based on the survey, long transfer times and limited interoperability were also reported as challenges. Because these proposals apply to the Kenyan end of a transfer, where money is paid into a bank account or mobile wallet, they may help with both. Greater interoperability can reduce fragmentation between those stages. It can potentially improve speed and connectivity. However, they do not by themselves set what a sender pays.

What Else Affects the Price

Just because systems are interoperable does not mean that remittance fees will be lower. Improved domestic infrastructure may enhance one section of the process without affecting the total amount that eventually reaches the recipient. According to World Bank data from the third quarter of 2025, the average fee for sending USD200 from the United States to Kenya was 4.26% World Bank data for the third quarter of 2025, the average cost of sendingUSD200 from the US to Kenya was 4.26%, which is above the United Nations’ 3% target for 2030.

This cost can comprise the provider’s fee, the exchange-rate margin (the difference between the market rate and the customer rate), fees charged by intermediary banks, and regulatory costs. Since these fees differ depending on the provider and the method used, the rate reached as high as 11.26% for cash-to-cash transfers and was under 2% for a number of card- or bank-funded transfers to mobile wallets.

It should be noted, though, that these figures are prior to the introduction of the 1% US tax on cash-funded transfers. Although remittances are a major source of foreign currency, they are alongside exports, tourism, portfolio flows, external borrowing, imports, and debt-service requirements.

Precious added, “Clear fee information, which the Bill proposes, may help customers see what they pay. The distinction is between infrastructure and outcome. Better rails can reduce friction and make the system more connected.”

What the Consultation Should Test Before 9 October

The consultation goes beyond being merely a technical exercise and its questions are measurable—for example, whether the suggested capital requirements promote resilient competition, how the instant payment switch will interact with current providers, whether interoperability leads to faster transfers, and whether the consumer protections keep up with the faster payments.

The longer-term question is whether the next generation of payment infrastructure can carry roughly USD5 billion a year in diaspora transfers more efficiently and resiliently, at a time when annual growth is no longer guaranteed.