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Businesses that move value by processing virtual asset payments—settling transactions, converting between virtual assets and fiat, or otherwise facilitating payment flows—fall under the Virtual Asset Payment Processor (VAPP) category of Kenya’s Virtual Asset Service Providers Regulations, 2026.
This is a distinct licence from a Virtual Asset Exchange or Virtual Asset Wallet Provider licence. It is built around transaction volume rather than custody, and its fee structure reflects that distinction.
Capital requirements
To qualify for a VAPP licence, an applicant must maintain:
- Paid-up capital: KSh 10,000,000
- Liquid capital: 100% of current liabilities for at least 30 days
This places payment processors in the same paid-up capital bracket as brokers, but with a stricter liquidity requirement. Instead of maintaining a percentage of liabilities, payment processors must maintain liquid capital equal to 100% of their current liabilities, reflecting the settlement risk associated with high-volume payment processing.
Fees
Applicants are required to pay:
- Application fee: KSh 100,000
- Licence fee: KSh 200,000
- Annual renewal fee: Based on annual gross transaction value, ranging from KSh 20,000 to KSh 15,000,000
| Gross transaction value per annum (KSh) | Renewal fee (KSh) |
|---|---|
| 0 – 1 billion | 20,000 |
| 1 billion – 10 billion | 100,000 |
| 10 billion – 50 billion | 500,000 |
| 50 billion – 100 billion | 1,000,000 |
| 100 billion – 500 billion | 5,000,000 |
| 500 billion – 1 trillion | 10,000,000 |
| Above 1 trillion | 15,000,000 |
Unlike most other VASP licence categories, where annual renewal is either a fixed fee or based on turnover, a VAPP licence renewal fee scales directly with the value of transactions processed. As a result, payment processors must accurately track and report their annual gross transaction value to ensure they fall within the correct renewal band.
Building the application
A VAPP application follows the same core licensing process as every other VASP category. Applicants must submit:
- Personal and background details of directors, senior officers, significant shareholders, and beneficial owners
- A business plan
- A completed fit-and-proper assessment form
- Proof of source of funds
- A description of the systems and controls governing the proposed payment processing business
- Operational policies covering:
- Risk management
- AML/CFT/CPF
- Data protection and privacy
- Cybersecurity and IT
- Complaints management
- Market conduct
- Consumer protection
- Conflict of interest
- Business continuity and disaster recovery
- Evidence of the required paid-up and liquid capital
- Audited financial statements for the previous three years, or opening financial statements for a newly incorporated applicant (together with consolidated audited financial statements of a foreign parent where applicable)
- Evidence of adequate human and technology resources
- An independent information systems audit, including a vulnerability assessment and penetration test
- Full disclosure of cross-border operations, affiliates, and regulatory status in other jurisdictions
- Certified incorporation documents, an up-to-date register of directors and shareholders, and a beneficial ownership register
- Proof of payment of the application fee
As with every VASP licence category, the regulator may require an interview to clarify aspects of the application. Refusing to participate is itself a ground for rejection.
What makes a payment processor’s risk profile different?
Payment processors occupy the settlement layer of the virtual asset ecosystem. While they may not hold customer assets for extended periods in the way wallet providers do, they facilitate the movement and conversion of value, often at significant transaction volumes and relatively low margins.
Separate CBK authorisation for conversion activities
Where a traditional payment processor (PSP) converts virtual assets into fiat currency, or fiat currency into virtual assets, that conversion activity requires a VAPP authorisation from the Central Bank of Kenya (CBK).
The authorisation may be suspended or revoked where the authorised person:
- Ceases trading
- Breaches the conditions attached to the authorisation
- Conducts business in a manner that threatens financial stability
Fiat-denominated pricing
Where consumer prices are expressed in Kenya Shillings, payment processors must always give consumers the option of transacting on that basis.
This is a consumer protection requirement aimed specifically at payment processing services.
Decision timeline and launch
Once the application is complete and due diligence has been concluded, the regulator has 30 days to determine the application and notify the applicant of its decision.
Grounds for refusal mirror those applicable across the VASP framework and include:
- Failure to respond to requests for additional information
- Failure to attend a requested interview
- Directors or shareholders who fail the fit-and-proper assessment
- A history of regulatory non-compliance
- A determination that granting the licence would pose a risk to financial stability
Once granted, the licence must be put into operation. The licensed business must commence within 12 months of the grant date, failing which the licence window lapses.
Staying compliant
After licensing, payment processors remain subject to the standard ongoing VASP obligations, including:
- Notifying the regulator within two days of material changes, including:
- Ownership changes
- Litigation
- Insolvency risks
- Regulatory enforcement action
- Cybersecurity incidents
- Material changes to the business model
- Submitting periodic compliance and complaints reports
- Maintaining adequate human and technology resources
- Appointing a compliance officer
- Maintaining effective governance, risk management arrangements, and a functioning board
Licences must be renewed annually. Renewal applications and the applicable fee must be submitted at least two months before expiry, with the renewal fee calculated using the transaction value bands set out above.
The practical takeaway
A VAPP licence is one of the more accessible entry points into Kenya’s regulated virtual asset sector from an initial fee perspective. However, the tiered renewal structure means that the long-term cost of holding the licence increases as transaction volumes grow.
Need help obtaining a VAPP licence?
If you’re planning to establish a Virtual Asset Payment Processor in Kenya, obtaining the right licence is only one part of the process. Structuring your business correctly, preparing a compliant application, developing the required governance and compliance framework, and navigating the regulatory approval process are equally critical.
MasiboLaw LLP advises fintech companies, payment providers, virtual asset businesses, and investors on licensing and regulatory compliance in Kenya. If you require assistance with a Virtual Asset Payment Processor (VAPP) licence application or any other VASP licence, contact us at info@masibolaw.co.ke to discuss your project.
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