Illustration: Onyango George / EA Hospitality Pulse

The law that reprices every deposit your lodge takes

By Onyango George (OG)

Treasury and the Central Bank spent the first week and a half of October taking public views on a Bill that rewrites the licensing of every company standing between a guest's card and a lodge's bank account. One of the eleven hearings was held in a hotel. The hospitality industry, which has already been taught once this year what a payment rail costs it, was largely somewhere else.

One of the eleven public forums on the draft National Payment System Bill was held at the Mombasa Beach Hotel, between nine in the morning and one in the afternoon, in a function room of the sort East African hotels rent out for about the price of a mid-season double. The venue was incidental. The subject was not. Somewhere in that building a card terminal was taking a deposit on a December booking, routed through a payment gateway whose right to exist in its current form is exactly what the Bill in the room was proposing to rewrite.

The National Treasury and the Central Bank of Kenya published the draft Bill, alongside a draft National Payment System Policy, on 21 September. The public participation window ran from 28 September to 9 October, across eleven venues from Garissa to Nandi, with submissions accepted by post, by hand at the Governor's office on Haile Selassie Avenue, or by email to paymentslawreview@centralbank.go.ke. The notice was signed by John Mbadi, Cabinet Secretary for the National Treasury. The Bill would repeal the National Payment System Act, Cap. 491A, the statute under which every payment service provider in Kenya currently operates. The window has now closed.

This is the most consequential piece of legislation for East African hospitality that almost nobody in East African hospitality read this month, and the reason is structural. Hotels and lodges are not payment companies. They are merchants. They do not hold a licence from the Central Bank and they will not need one under the new regime either. What they hold instead is a contract with somebody who does, and that contract is about to be renegotiated by force of law.

Consider what the draft actually proposes. It creates ten licence categories, six for payment service providers and four for payment system operators, each carrying a minimum capital requirement set out in the Third Schedule. Payment initiation and account information services sit at KES 5 million each. Money remittance sits at KES 30 million. Merchant acquiring and electronic wallets sit at KES 50 million. Electronic money issuance, the category into which an operation on the scale of M-Pesa would fall, sits at KES 250 million. On the operator side, payment gateways sit at KES 10 million, payment messaging at KES 20 million, and card schemes and switching and clearing at KES 50 million apiece. An applicant licensed under more than one category would hold the minimum for the highest-capital category plus fifty per cent of the minimum prescribed for the additional one. Clause 78 repeals the old Act outright and clause 79 requires any person providing payment services to comply within one year of commencement. Publication for consultation does not itself repeal anything or validate an existing authorisation, so current holders may have to apply again, and clause 7(7) bars an applicant whose application is declined from submitting another for twelve months.

That last point is where the argument begins, because it meets a market that is smaller and thinner than most operators assume. The Central Bank's own directory of authorised payment service providers, dated 6 November 2025, lists 41 companies. Nine are authorised to issue mobile money. Seven process it without issuing. Three run payment infrastructure. Two are special cases, including the firm that collects parking fees at Kenyan airports. The remaining twenty are authorised for one thing only: operating a merchant payment platform. That bracket contains the names a safari camp or a boutique hotel on Diani actually deals with, including Pesapal, Direct Pay, Kasapay, Zamupay, Tendepay and Dolcepay, alongside the international entrants Paystack, dLocal and Unlimit.

Twenty small-to-middling companies, facing a capital floor, a reapplication and a twelve-month lockout if that application fails, is not a stable field. The predictable outcome is consolidation, and consolidation is where the merchant discount rate lives. A lodge that currently pays a competitive rate because four gateways want its volume will discover what it pays when two do. Nothing in the Bill sets or caps a merchant fee. It requires providers to disclose fees and terms clearly, which is a transparency rule, not a price rule. Operators should read the capital schedule as a forecast of their own cost of acceptance in 2028, and they should read it now, because 2027 rate cards are being signed this quarter.

The sector does not need to be told in the abstract what a payment decision costs it. It has this year's receipts. When the Kenya Wildlife Service moved park entry fees and the rail that collected them, the industry's objection was never mainly about the money. "Our protest isn't necessarily about the increase," Fred Odek, chairman of the Kenya Tourism Federation, said in early October 2025, when the federation went to court over fees announced with two days' notice. On 3 October 2025 the Milimani High Court granted the federation an injunction, Justice John Chigiti issuing a conservatory order halting the increase pending a full hearing. By March 2026 the federation had taken a separate petition on the payment system itself to Parliament, asking lawmakers to reverse the migration away from the old eCitizen platform.

The grievance that followed was specifically about a payment charge, and it is worth quoting at length because it is the clearest statement on record of how this transmission works. By April 2026 operators were objecting to a five per cent gateway fee layered onto park payments. The federation put the cost to the industry at roughly KES 550 million. Operators had been given about 48 hours' notice, and had already published their 2026 rates, so the charge could not be passed to the client and had to be absorbed. "That is not a sustainable situation for businesses operating on thin margins," said Daniel Mbugua, chairman of the Tour Operators Society of Kenya. Odek's complaint was narrower and sharper: "The gateway fee has no receipt." Conservation fees generated one. The payment charge did not, which means it could not be reclaimed, audited, or shown to a client. Kennedy Kaunda, group chief executive of the East Africa Tour Guides and Drivers Association, was blunter about the operational side: "The new KWS payment system is chaotic." The system also offered no provisional holds, which for an industry that books a year out is not a feature complaint but a cash-flow one.

Hold that episode against the draft Bill and the question an operator should be putting to the consultation becomes obvious, and as far as the public record shows nobody from hospitality put it. A safari operator takes a deposit of twenty to thirty per cent at confirmation and the balance thirty to sixty days before arrival. It then disburses that money to lodges, camps, transport and park authorities. For months, it is holding a client's funds on behalf of third parties. Read clause 4 alongside the definitions beside it and the question stops being rhetorical. The Act applies to any person who acts as a provider "in relation to sending, receiving, storing or processing of payments", and separately to anyone who "owns, possesses, operates, manages a system that facilitates cross-border payments or money remittance services". Money remittance is itself defined as "the acceptance of monies for the purpose of transmitting them to persons resident in Kenya or another country". Clause 9 then sets out who needs no licence, and that list is short and closed: state-owned enterprises, banks, microfinance banks and building societies. The Bill does address customer funds, at clause 36, requiring electronic money issuers and electronic wallet providers to hold monies in trust accounts, with clauses 37 to 40 covering commingling, insolvency and income, and a Fourth Schedule barring those same two categories from holding more than KES 500 million or a quarter of trust monies with a single bank, whichever is higher. Those are the right protections, and they are written for two licence categories a tour operator does not hold. Whether an operator's client account sits inside this perimeter or outside it is a question for the drafters rather than an accusation, and the consultation was the place to ask it.

The scale against which these rules are being written is genuinely large. M-Pesa handled 46.4 billion transactions worth KES 41.7 trillion in the financial year to March 2026, a figure that counts the same shilling more than once as it moves, and held roughly KES 250 billion in customer trust accounts at the last count the Central Bank cited. Nobody designing a payments statute around numbers like those is thinking about a twenty-room camp in Laikipia, which is precisely why the camp should have been in the room.

The cost of the rail, as opposed to the cost of the service, is measurable, and the remittance data make the point with unusual clarity. World Bank figures put the average cost of sending 200 US dollars from the United States to Kenya at 4.26 per cent, against a UN target of three per cent by 2030. Break that down by instrument and it becomes 11.26 per cent for cash to cash and under two per cent for a card or bank-funded transfer into a mobile wallet. The same money, the same corridor, a fivefold difference decided entirely by which pipe it travels down. Kenyan remittances reached a record 451.8 million dollars in August even as the twelve-month total slipped 1.3 per cent, with United States inflows down 12.6 per cent after a one per cent tax on cash-funded transfers took effect in January. David Precious, senior market analyst at EBC Financial Group, warned that higher costs "may push some senders to informal channels", where official data stops seeing them. An operator whose European clients start paying by whichever method is cheapest for them rather than cheapest for the lodge will recognise the dynamic.

None of this is a Kenyan eccentricity, which is why Tanzanian, Ugandan and Rwandan operators should treat the Nairobi draft as a preview rather than a neighbour's problem. Rwanda has run capital floors of this shape since Regulation No. 74/2023 came into force, requiring 300 million Rwandan francs for a large electronic money issuer, 100 million for a smaller issuer or payment aggregator, 50 million for payment initiation and account information services, and 30 million for money remittance. Kenya's proposed numbers sit in the same register. The direction of regional travel is towards fewer, better capitalised, more closely supervised payment companies, and a hotel sector that sells in dollars, collects in four currencies and settles in shillings has more exposure to that shift than almost any other merchant category.

What remains available to an operator is small, specific and worth doing this month. Ask your gateway, in writing, which of the ten categories it intends to apply under and whether it expects to clear the capital requirement. Ask what happens to your settlement timetable if it does not. Get the answer before you sign a 2027 contract, not after. Treat the cost of acceptance as a line in next year's rate build rather than a surprise in a reconciliation. The lesson of the park fee episode was never really about five per cent. It was about the 48 hours, and about who was in the room when the rail was priced. The room was open until 9 October, in Mombasa among other places. It is closed now.