Kenya and Rwanda have signed a memorandum of understanding to harmonise the licensing of cross-border payment service providers, allowing companies authorised in one nation to operate in the other without seeking a separate licence. The agreement, signed on March 11, 2026, by the Central Bank of Kenya (CBK) and the National Bank of Rwanda (BNR), is designed to reduce regulatory barriers and foster a more integrated regional payments landscape.

The deal establishes a framework for mutual recognition of payment service provider licences between the two East African Community (EAC) member states. This means a company licensed by the CBK as a payment service provider can offer its services in Rwanda under the oversight of the BNR, and vice versa, without undergoing a full, duplicate licensing process. The central banks stated the move aims to lower the cost and complexity of cross-border payments for individuals and businesses.

This bilateral agreement represents a tangible step towards the broader goal of the Pan-African Payment and Settlement System (PAPSS), an initiative of the African Export-Import Bank (Afreximbank) and the African Continental Free Trade Area (AfCFTA) Secretariat. PAPSS seeks to facilitate instant, cross-border payments in local currencies across Africa, reducing reliance on correspondent banks and hard currencies like the US dollar. The Kenya-Rwanda pact is seen as a building block that could serve as a model for other nations looking to integrate their financial systems.

Both Kenya and Rwanda have been at the forefront of digital financial innovation in Africa. Kenya is home to M-Pesa, the pioneering mobile money service operated by Safaricom, which has achieved near-ubiquitous penetration domestically and is expanding across the region. Rwanda has aggressively pursued a cashless economy agenda, with high mobile money adoption rates and a supportive regulatory environment for fintechs. The licensing agreement could provide a significant boost to fintech companies based in either country, offering them a larger, combined market to serve with fewer regulatory hurdles.

The collaboration is expected to streamline operations for payment companies, remittance firms, and other fintechs that facilitate transactions between the two nations. It addresses a common pain point for African fintechs seeking regional scale: navigating distinct, and sometimes conflicting, regulatory regimes in each new market, which increases compliance costs and slows expansion. By aligning their approaches, the CBK and BNR are creating a more predictable pathway for licensed entities.

Analysts view the agreement as a positive development for regional trade under the AfCFTA, as smoother, cheaper payment flows are a critical enabler for the movement of goods and services. The success of this bilateral model will be closely watched by other central banks on the continent. If effective, it could accelerate similar agreements between other EAC partners or within different African regional blocs, gradually knitting together a more seamless continental payments network.