By Benadeta Mwaura - Reporter
Kenya, May 14, 2026 - Digital payments in Kenya, long seen as a driver of financial inclusion and everyday convenience, could soon become more expensive if proposed tax measures in the Finance Bill 2026 are fully implemented.
According to an analysis by PwC, the proposed changes could increase the cost of transactions made through cards and other digital platforms, raising concerns about the broader impact on consumers and businesses already grappling with a high cost of living.
The advisory firm cautioned that the introduction of taxes on fees linked to digital transactions, including those involving global payment networks such as Visa and Mastercard, could have a ripple effect across the economy.
While the tax may be targeted at service providers, the cost is likely to be passed on to end users.
This warning comes against the backdrop of existing taxation in the sector.
Kenya already applies a 16 percent Value Added Tax (VAT) on fees charged for mobile and digital financial services, including transactions conducted through platforms such as M-Pesa and payment gateways like Pesapal.
In practice, this means that every transaction charge, whether sending money, paying bills, or processing merchant payments, includes VAT, effectively raising the cost borne by consumers and businesses.
Any additional levies proposed in the Finance Bill would therefore sit on top of an already taxed system, amplifying the overall financial burden.
As PwC noted in its analysis, such measures risk increasing the overall cost of digital payments, potentially discouraging usage at a time when Kenya has been pushing for a cash-lite economy.
This warning comes at a critical moment. Kenya has built one of Africa’s most advanced digital payment ecosystems, anchored by mobile money and card transactions that power everything from supermarket purchases to transport fares. Any increase in transaction costs could therefore have far-reaching implications.
For ordinary Kenyans, the impact could be immediate and tangible.
A commuter paying fare through a digital platform may notice slightly higher charges. A small business owner using a card payment system could face increased transaction fees. For a mama mboga gradually transitioning from cash to mobile payments, the added cost might make digital options less attractive.
More from Kenya
While each increase may appear small in isolation, the cumulative effect across millions of daily transactions could be significant.
Beyond consumers, businesses could also feel the strain. Higher transaction costs may force enterprises to either absorb the expenses, reducing their margins, or pass them on to customers through higher prices. In a fragile economic environment, both options carry risks.
The concern raised by PwC also touches on a broader policy dilemma facing the government. On one hand, there is an urgent need to raise revenue to address a widening budget deficit and rising debt obligations.
On the other, increasing the cost of digital transactions could slow down financial inclusion and economic formalisation efforts that have taken years to build.
Digital payments have been instrumental in bringing more Kenyans into the formal financial system, enabling easier tax collection, improving transparency, and supporting small businesses. Any policy that makes these systems less accessible risks reversing some of those gains.
At the same time, the government has defended similar proposals in the past, arguing that the tax base must expand to include emerging sectors and technologies.
The challenge lies in finding a balance, ensuring that revenue targets are met without stifling innovation or overburdening consumers.
The debate also reflects a deeper shift in Kenya’s tax strategy. As traditional revenue streams come under pressure, policymakers are increasingly turning to digital and financial ecosystems as new sources of income.
But as this happens, the question becomes not just how much can be taxed, but how much the system can absorb without slowing down.
For now, the proposals remain part of a broader legislative process, and their final form will determine the extent of the impact.
But as PwC has warned, the direction is clear: without careful calibration, the cost of convenience in Kenya’s digital economy could soon rise, felt not in boardrooms, but in the everyday transactions of millions of users.