Kenya’s Sh100,000 Cash Law: Will It Save or Stall the Digital Economy?

Dr. Shahid Masood
1 day ago
5 min read

Kenya, one of Africa’s digital economy powerhouses, is at a regulatory crossroads. A new legislative proposal—the Central Bank of Kenya (Amendment) Bill, 2025—aims to ban cashless-only transactions for payments under Ksh100,000 (approximately $775). This move, championed by Suba South Member of Parliament Caroli Omondi, challenges the country’s steady pivot toward a fully digital financial ecosystem.

The bill has stirred a national conversation about inclusion, resilience, digital equity, and the very definition of legal tender in the 21st century. Below is an expert-level breakdown of the bill’s implications, the motivations behind it, and its potential to reshape Kenya’s economic future.

Understanding the Central Bank Amendment Bill, 2025

At the heart of the proposed legislation lies a fundamental consumer protection principle: equitable access to payment systems. The bill seeks to:

Mandate all businesses with physical premises to accept cash for transactions under Ksh100,000.
Prohibit businesses from penalizing cash users through higher pricing.
Introduce penalties for non-compliance, including a fine of up to Ksh100,000 and potential civil liability.
Provide limited exemptions for system failures or lack of cash for change.

This is a direct response to the increasing trend of shops, transport services, and government agencies declaring themselves “cashless” or “card-only,” effectively excluding large segments of the population.

Kenya’s Digital Economy: A Double-Edged Sword

Kenya has long been heralded as a global leader in mobile payments, with M-Pesa often cited as a transformative model of financial inclusion. According to the Central Bank of Kenya, the country’s digital payments market is expected to reach $14.5 billion by 2028, driven by mobile money, debit/credit card usage, and the expansion of the e-Citizen platform.

However, this digital rise has produced three critical exclusion gaps:

Technological IlliteracyMany elderly citizens and rural populations remain unfamiliar with mobile payment systems.
Device and Internet Access BarriersA significant proportion of Kenyans—particularly in rural areas—lack smartphones or reliable internet, making digital transactions impractical.
Unbanked and Underbanked PopulationsDespite rising mobile money usage, millions remain unbanked or fail credit checks, disqualifying them from the cashless economy.

“A large segment of society cannot access credit or debit cards as they are unbanked, while the banked population also fails credit checks or are suffering financial hardship,” – Caroli Omondi, MP.

Comparative Global Context: The Right to Use Cash

Kenya is not alone in confronting the digital exclusion dilemma. Across the globe, countries are recognizing the societal risks of a cashless-only economy.

Country	Policy Intervention	Year	Outcome
Norway	Amended Financial Contracts Act to guarantee right to pay with cash	2024	Ensured legal access to cash in retail transactions
United States	Several cities and states banned cashless-only stores	2019–2023	Retailers must accept cash alongside digital payments
Germany	High cash usage continues despite strong digital infrastructure	Ongoing	Preserves privacy and consumer choice

These cases reinforce the notion that a hybrid economy—where cash and digital coexist—is essential for inclusivity and resilience.

Digital Vulnerabilities: A National Security Argument

Beyond social inclusion, Omondi’s bill invokes a critical risk management argument. He cites the July 2024 IT systems crash in the United States as a cautionary precedent. During the outage, digital payment networks went offline, leading to nationwide chaos as consumers and businesses were paralyzed without access to physical cash.

“As a matter of good risk management, the option for cash payments should at all times be available to deal with instances of widespread IT outages due to system failures, deliberate sabotage or natural disasters,” – Caroli Omondi.

In a world where cybersecurity threats, system downtimes, and geopolitical tensions are intensifying, cash becomes a fallback infrastructure, not just a medium of exchange.

Industry Pushback: The Case for a Digital-First Economy

Supporters of digital payment systems argue that cashless operations:

Reduce theft risks
Improve record-keeping and tax compliance
Cut handling costs
Streamline transactions for both consumers and businesses

Many businesses view digital payments as more efficient and less prone to fraud. The government itself has embraced a fully digital service model for critical public functions—including passport applications, birth/death registrations, and park fees—all paid through e-Citizen.

Therefore, the bill may clash with the government’s broader digitization strategy, potentially slowing down innovations aimed at e-governance and FinTech expansion.

Consumer Rights vs Business Flexibility

The bill underscores an evolving tension in modern economies: the balance between consumer protection and business autonomy. While digital systems serve operational goals, they must not marginalize vulnerable populations.

“By ensuring that businesses cannot refuse cash or impose unfair pricing policies, the Bill seeks to protect consumer rights and eliminate discrimination based on payment methods,” – Excerpt from the Bill.

For example, charging more for cash transactions or rejecting them altogether could constitute a violation of economic rights, especially when cash is still considered legal tender by the Central Bank of Kenya.

Economic Equity: Who Gets Left Behind?

Cash-based consumers often represent:

Rural populations with limited infrastructure
Elderly citizens unfamiliar with apps and mobile wallets
Informal workers paid in cash
Low-income households lacking credit access

Failure to accommodate these groups could deepen existing economic divides and stifle national cohesion. It also risks financial disenfranchisement, effectively removing segments of the population from participating in the formal economy.

Penalties and Compliance: A Legal Perspective

The proposed fines—up to Ksh100,000 (~$775)—are substantial enough to push compliance. However, enforcement will be a challenge, particularly in informal sectors like:

Street vending
Public transportation (matatus)
Rural retail

It remains unclear how the law would be monitored and what resources would be allocated to its enforcement. Additionally, civil suits from aggrieved consumers could introduce a new layer of legal risk for businesses.

The Future of Payments: Toward a Hybrid Model

A balanced approach may be Kenya’s best path forward:

Encourage digital literacy programs for vulnerable populations.
Invest in resilient payment infrastructure that can withstand outages.
Incentivize rather than mandate digital adoption—rewarding businesses that embrace both modes.
Implement data privacy safeguards to complement digital expansion.

Conclusion

The Central Bank of Kenya (Amendment) Bill, 2025 is more than just a financial regulation—it is a statement about inclusion, sovereignty, resilience, and economic justice. Kenya’s transition to digital must not come at the expense of its most vulnerable citizens. As global events have shown, cash is not obsolete—it is essential infrastructure in times of disruption.

As the debate unfolds, all eyes will be on how Parliament, businesses, and consumers navigate the friction between technological progress and human inclusion.

For those analyzing the intersection of policy, finance, and technology, this bill is a case study in designing future-ready, equitable economies.

Explore the latest insights on regulatory reform, fintech infrastructure, and digital equity at 1950.ai—where global issues meet intelligent solutions. Backed by the expertise of Dr. Shahid Masood and the strategic team at 1950.ai, we provide predictive AI tools to guide decision-makers in finance, governance, and digital transformation.