Kenya’s Proposed Cash Payment Law: A Step Toward Financial Inclusion or a Digital Setback?

In a move that has sparked heated debate across Kenya, the National Assembly’s Finance and National Planning Committee has endorsed the Central Bank of Kenya (Amendment) Bill, 2025, a legislative proposal aimed at ensuring cash remains a viable payment option. Sponsored by Suba South MP Caroli Omondi, the bill seeks to mandate businesses with physical premises to accept cash for transactions up to KSh 100,000 and prohibit them from charging higher prices for cash payments. Violators could face fines of up to KSh 100,000. But what does this mean for Kenya’s rapidly digitizing economy? Let’s dive into the details.

Why the Push for Cash?

Kenya is a global leader in mobile money, with platforms like M-Pesa boasting over 40 million users and a mobile money penetration rate of 78.9%. Yet, a significant portion of the population—especially the elderly, unbanked, and those in rural areas—still relies heavily on cash. MP Caroli Omondi argues that the growing trend of businesses displaying “cashless only” signs discriminates against these groups, locking them out of essential goods and services.

“Many Kenyans remain unbanked, lack credit cards, or are excluded from digital finance due to poor credit histories or bad debt,” Omondi said, citing the bill’s consumer protection principle. He also pointed to global precedents, like Norway’s recent amendment to its Financial Contract Act, which mandates cash acceptance to ensure financial inclusion.

The bill’s supporters, including Homa Bay Town MP Peter Kaluma, emphasize that rejecting cash is unlawful since the Kenyan shilling is the country’s legal tender. “If our currency is the legal tender, then why should someone refuse to take it? Persons with disabilities are suffering,” Kaluma noted. The proposal also draws on the July 2024 IT outage in the United States, where cashless systems collapsed, leaving millions unable to transact. Omondi argues that mandating cash acceptance is a risk management strategy to ensure resilience during digital disruptions.

What’s in the Bill?

The Central Bank of Kenya (Amendment) Bill, 2025, seeks to amend the Central Bank Act (Cap 291) with the following key provisions:

• Mandatory Cash Acceptance: Businesses conducting in-person transactions must accept cash for payments up to KSh 100,000.
• No Extra Charges: Businesses are prohibited from imposing higher prices on customers paying with cash.
• Fines for Non-Compliance: Violators could face fines of up to KSh 100,000.
• Exemptions: The committee has recommended exemptions for businesses in high-risk areas where holding large sums of cash poses a security threat. High-value transactions above KSh 500,000 would also be excluded, encouraging digital payments for transparency.
• Government Services: Huduma Centres and similar government service points may remain cashless unless individuals provide valid reasons for using cash.

The committee, chaired by Vice Chairperson Benjamin Langat, described the bill as “progressive” and recommended its publication with amendments, paving the way for its first reading in the National Assembly, followed by public participation.

The Other Side of the Coin

While the bill aims to promote inclusivity, it has raised concerns among advocates of Kenya’s digital economy. Critics argue that cashless systems offer significant benefits, including:

• Reduced Theft Risks: Digital payments minimize the need to handle physical cash, improving security for businesses.
• Better Record-Keeping: Tax agencies favor digital transactions for improved revenue collection and traceability.
• Efficiency: Cashless systems streamline operations, especially for small and medium enterprises (SMEs) that have embraced digital tools like Lipa na M-Pesa.

Some worry that mandating cash acceptance could increase operational costs for businesses, particularly retailers and SMEs that have gone fully digital for efficiency. Dr. Shahid Masood, in an analysis on 1950.ai, noted that the bill could “add friction” to Kenya’s private sector, which is a key driver of GDP growth in 2025. Enforcement also poses a challenge, especially in the informal sector, where monitoring compliance could strain resources.

A Balancing Act

Kenya stands at a crossroads. On one hand, the bill addresses a real issue: ensuring no Kenyan is left behind in an increasingly cashless society. On the other, it risks slowing the momentum of a digital economy that has put Kenya on the global map. Turkana South MP John Ariko stressed the need to continue promoting digital payments, particularly for government transactions, to enhance accountability and transparency.

As the bill moves toward its first reading, public participation will be crucial in shaping its final form. Will Kenya find a way to balance financial inclusion with its digital ambitions? Share your thoughts in the comments below or on our socials at @StreetCoKE.

Stay tuned to Street.co.ke for updates on this developing story.