Mobile Payment Merchant Agreement (Kenya)
MOBILE PAYMENT MERCHANT AGREEMENT
THIS MOBILE PAYMENT MERCHANT AGREEMENT ("Agreement") is made on [Agreement Date] between: [Provider Name] (CBK Licence No. [Provider CBK Licence]) of [Provider Address] ("Payment Provider") and [Merchant Name] (BRS No. [Merchant BRS Number], KRA PIN: [Merchant KRA PIN]) of [Merchant Address] ("Merchant"). This Agreement is governed by the National Payment System Act No. 39 of 2011, the National Payment System Regulations 2014 (Legal Notice No. 67 of 2014), the Law of Contract Act Cap. 23, the Data Protection Act No. 24 of 2019, and the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA).
1. Merchant Account and Payment Channel
1.1 The Payment Provider hereby grants the Merchant access to the following mobile money payment channel: [Payment Channel]. 1.2 Merchant Account Details: - Till Number / Paybill Number / Merchant Code: [Till/Paybill Number] - Transaction Currency: [Transaction Currency] - Daily Transaction Limit: [Daily Transaction Limit] - Per-Transaction Limit: [Per-Transaction Limit] 1.3 The Merchant is authorised to accept mobile money payments from customers through the channel specified above only for lawful commercial transactions consistent with the Merchant's registered business activities.
2. Merchant Service Charge and Fees
2.1 The Merchant Service Charge applicable to transactions under this Agreement is: [Merchant Service Charge]. 2.2 All applicable charges are subject to excise duty under the Excise Duty Act (Cap. 474), currently levied at 15% on mobile money transfer fees in Kenya. 2.3 The Payment Provider's published tariff, as approved by the Central Bank of Kenya (CBK) under the National Payment System Act No. 39 of 2011, governs all fees not expressly stated in this Agreement. The Merchant accepts the Provider's standard LC issuance commission and processing fees.
3. Settlement Terms
3.1 Settlement Cycle: The Payment Provider shall settle all cleared merchant transaction proceeds to the Merchant's settlement account within [Settlement Cycle] of each business day. 3.2 Settlement Account: - Bank: [Settlement Bank Name] - Account Number: [Settlement Account Number] 3.3 Settlement Withholding: The Payment Provider may withhold settlement pending investigation of suspicious transactions under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA) or where the CBK directs a hold on the Merchant's account. 3.4 The Merchant shall promptly notify the Payment Provider of any change to the settlement bank account details.
4. Failed Transactions, Reversals and Disputes
4.1 Reversal Investigation Window: The Payment Provider shall investigate failed or disputed transactions within [Reversal Window] of the merchant or customer raising the dispute. 4.2 Merchant Response: The Merchant shall, upon request, provide the Payment Provider with proof of delivery or service within the investigation window. Failure to provide proof may result in a chargeback being processed against the Merchant's account. 4.3 Dispute Escalation: Disputes not resolved internally shall be escalated to: [Dispute Resolution]. Under the Consumer Protection Act No. 46 of 2012, customers may also refer unresolved disputes to the Competition Authority of Kenya (CAK). 4.4 CBK Consumer Protection Framework: Both parties shall comply with the CBK's Consumer Protection Framework for Digital Financial Services in handling failed transaction complaints.
5. Data Protection
5.1 The Merchant shall process all customer transaction data in compliance with the Data Protection Act No. 24 of 2019, administered by the Office of the Data Protection Commissioner (ODPC). 5.2 Where the Merchant processes customer personal data at scale, the Merchant shall register with the ODPC as a data controller under Section 16 of the Data Protection Act. 5.3 Customer payment transaction data shall not be used for any purpose other than processing and reconciling mobile money payments unless the customer has given separate, explicit consent. 5.4 The Merchant shall retain transaction records for [Record Retention Period] in accordance with Regulation 16 of the Proceeds of Crime and Anti-Money Laundering Regulations, 2013.
6. Anti-Money Laundering Obligations
6.1 The Merchant shall comply with the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA) and the Proceeds of Crime and Anti-Money Laundering Regulations, 2013. 6.2 The Merchant shall implement Know Your Customer (KYC) procedures for high-value customer transactions as required by the Payment Provider and the Financial Reporting Centre (FRC). 6.3 The Merchant shall file Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs) with the Financial Reporting Centre (FRC) in respect of transactions above the prescribed thresholds set by the FRC under Section 21 of POCAMLA. 6.4 The Merchant shall retain all transaction records for [Record Retention Period] and make them available for inspection by the Payment Provider, CBK, FRC, or any competent authority upon request.
7. Term and Termination
7.1 This Agreement shall be effective from [Agreement Date] for an initial term of [Agreement Term]. 7.2 Either party may terminate this Agreement by giving [Termination Notice] to the other party. 7.3 The Payment Provider may terminate this Agreement immediately if: (a) the Merchant commits fraud or engages in money laundering or other criminal activity; (b) the Merchant's CBK registration or business licence is revoked or suspended; (c) the Merchant becomes insolvent under the Insolvency Act No. 18 of 2015; or (d) the CBK directs the Payment Provider to terminate the Merchant's account. 7.4 On termination, the Merchant shall cease to use the merchant account immediately. The Payment Provider shall settle all outstanding cleared transactions to the Merchant's settlement account within 5 business days of the termination date, subject to any withheld amounts under Clause 3.3.
8. General Provisions
8.1 This Agreement constitutes the entire agreement between the Payment Provider and the Merchant regarding the mobile payment service and supersedes all prior arrangements. 8.2 This Agreement is governed by the laws of Kenya. The parties submit to the non-exclusive jurisdiction of the High Court of Kenya for the resolution of any dispute, subject to the dispute escalation procedure in Clause 4.3. 8.3 The Merchant acknowledges that the Safaricom PLC standard merchant terms (for M-Pesa services) and the CBK National Payment System Regulations 2014 are incorporated into this Agreement by reference. 8.4 Any amendment to this Agreement must be made in writing and signed by authorised representatives of both parties. 8.5 Notices under this Agreement shall be delivered in writing to the addresses set out above, by hand, registered post, or email.
Payment Service Provider
________________
Signature
Merchant
________________
Signature
Witness
________________
Signature
What Is a Mobile Payment Merchant Agreement (Kenya)?
A Mobile Payment Merchant Agreement in Kenya governs the relationship between the parties by fixing what each must do.
The National Payment System Act No. 39 of 2011 designates the Central Bank of Kenya as the primary regulator of payment systems and authorises the CBK to issue Payment System Regulations, which were published in 2014 and updated periodically thereafter. Safaricom's M-Pesa service — the world's largest mobile money platform by transaction volume — operates under CBK's payment system oversight, and all merchants integrating M-Pesa must enter into a Merchant Agreement with Safaricom PLC or an authorised M-Pesa aggregator such as Cellulant, Pesapal, or Flutterwave Kenya. The Merchant Agreement defines the merchant's rights to receive funds, the settlement cycle, the transaction fees, and the dispute resolution procedure.
A Mobile Payment Merchant Agreement in Kenya is distinct from a Mobile Lending Agreement or a Mobile Banking Agreement. A Merchant Agreement specifically governs the receipt of payments from customers at the point of sale — whether in-store via a till number (Lipa na M-Pesa Buy Goods), through a paybill number for business-to-customer payments, or through an Application Programming Interface (API) integration for e-commerce and platform payments. The Data Protection Act No. 24 of 2019, administered by the Office of the Data Protection Commissioner (ODPC), applies to the processing of personal data of customers paying via mobile money.
The Kenya Revenue Authority (KRA) requires all merchants accepting mobile payments above threshold amounts to register for tax under the Tax Procedures Act No. 29 of 2015 and report mobile money receipts in their income tax returns under the Income Tax Act (Cap. 470). The KRA's Tax Invoice Management System (TIMS) and the Electronic Tax Register (ETR) requirements apply to traders who meet the VAT registration threshold under the Value Added Tax Act No. 35 of 2013.
The Communications Authority of Kenya (CA), established under the Kenya Information and Communications Act (Cap. 411A), regulates the telecommunications operators providing the underlying mobile network infrastructure through which mobile money transactions are transmitted. Merchants integrating mobile money payments through USSD shortcodes or SIM Toolkit applications interact with the CA-licensed mobile network operators. The Consumer Protection Act No. 46 of 2012 protects customers who experience failed transactions or delayed reversals and provides a right of complaint to the Competition Authority of Kenya (CAK). Under Kenya law, Section 3 of the Companies Act 2015 (No. 17 of 2015) and Section 2 of the Law of Contract Act (Cap 23) govern the core requirements for this type of document.
When Do You Need a Mobile Payment Merchant Agreement (Kenya)?
A Mobile Payment Merchant Agreement in Kenya is required whenever a business entity intends to accept mobile money payments from customers through an official merchant channel registered with a payment service provider licensed by the Central Bank of Kenya under the National Payment System Act No. 39 of 2011.
When a retail shop, supermarket, or restaurant in Nairobi, Mombasa, or any Kenyan town wishes to accept Lipa na M-Pesa Buy Goods payments at the point of sale, the business must sign a Merchant Agreement with Safaricom PLC or an authorised M-Pesa super-agent. Without the agreement, the merchant cannot register a till number and cannot legally receive M-Pesa Buy Goods payments from customers.
When a school, hospital, water utility, or government body in Kenya wishes to collect fees or service payments via a Paybill number on the M-Pesa platform, a Merchant Agreement or Paybill Agreement must be signed with Safaricom PLC. The agreement sets out the settlement frequency — typically T+1 or T+2 business days — and the float management requirements.
When a technology company or e-commerce platform in Kenya integrates a mobile money payment gateway using the Daraja API (M-Pesa's developer API) or the Airtel Money API, the platform must execute a Merchant Agreement specifying the API access credentials, transaction limits, and the liability framework for failed or disputed transactions under the National Payment System Regulations, 2014.
When a micro, small, or medium enterprise (MSME) registered with the Business Registration Service (BRS) via eCitizen enters into an arrangement with a payment aggregator such as Pesapal, Flutterwave Kenya, or DPO Group to accept multiple mobile money options and card payments, a Merchant Agreement with the aggregator is required, incorporating the aggregator's compliance obligations under the CBK's Payment Service Provider Framework.
When a SACCO regulated by the SACCO Societies Regulatory Authority (SASRA) under the Sacco Societies Act No. 14 of 2008 wishes to enable members to deposit contributions or repay loans via mobile money, the SACCO must execute a Merchant Agreement specifying the transaction reconciliation and anti-money laundering procedures required under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA).
What to Include in Your Mobile Payment Merchant Agreement (Kenya)
A Mobile Payment Merchant Agreement in Kenya must contain the following essential elements to be compliant with the National Payment System Act No. 39 of 2011 and the CBK Payment System Regulations.
Parties and Registration: Full legal names of the payment service provider and the merchant, the merchant's Business Registration Service (BRS) registration number or Certificate of Incorporation number, KRA PIN, and the business category. The payment provider's CBK licence number and registered address must be stated.
Merchant Account Details: The till number, paybill number, or API merchant code assigned to the merchant, the nature of transactions the merchant is authorised to accept (Buy Goods, Paybill, API), and the transaction currency (Kenya Shillings, KES).
Transaction Limits and Fees: Daily and per-transaction limits set by the payment provider in accordance with CBK guidelines. The merchant service charge (typically 0% to 1.5% per transaction for Buy Goods and Paybill merchants) and any monthly maintenance fees must be clearly stated.
Settlement Terms: The settlement cycle — typically T+1 or T+2 business days — the bank account to which funds are settled, the settlement bank's name and account number, and the conditions under which settlement may be withheld pending investigation of suspicious transactions under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009.
Float Management: For merchants acting as M-Pesa agents or super-agents, the minimum float balance requirements and the procedure for purchasing float (e-value) from the payment provider or a super-agent must be specified.
Dispute Resolution and Chargebacks: The procedure for reversals of failed transactions, the timeline for investigation (typically 72 hours under CBK guidelines), and the liability allocation between the merchant and the payment provider for chargebacks and fraud losses.
Data Protection: Obligations to process customer transaction data in compliance with the Data Protection Act No. 24 of 2019 and the Office of the Data Protection Commissioner (ODPC) guidelines, including requirements to register as a data controller where applicable.
Anti-Money Laundering: Merchant obligations to report suspicious transactions to the Financial Reporting Centre (FRC) under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009, including Know Your Customer (KYC) requirements for high-value transactions.
Termination: The grounds on which either party may terminate the agreement — including breach, fraud, licence revocation, or insolvency — and the procedure for winding down the merchant account, returning float, and settling outstanding transactions.
Forms-legal.com provides this Kenya Mobile Payment Merchant Agreement as a practical starting template. Both the merchant and payment provider should obtain independent legal advice before signing, particularly regarding CBK regulatory obligations applicable to the specific mobile money service being deployed. Under Kenya law, Section 3 of the Companies Act 2015 (No. 17 of 2015) and Section 2 of the Law of Contract Act (Cap 23) govern the core requirements for this type of document. Under Kenya law, Section 15 of the Employment Act 2007 (No. 11 of 2007) and Section 24 of the Land Registration Act 2012 (No. 3 of 2012) govern the core requirements for this type of document.
Additional compliance elements for a Mobile Payment Merchant Agreement (Kenya) used in Kenya include: Under the Central Bank of Kenya Act (Cap. 491), the Central Bank of Kenya (CBK) regulates banking. The Capital Markets Authority (CMA) regulates securities under the Capital Markets Act (Cap. 485A). Section 84 of the Bills of Exchange Act (Cap. 27) governs promissory notes. The Kenya Revenue Authority (KRA) administers tax obligations. The Microfinance Act No. 19 of 2006 regulates microfinance institutions. The Hire Purchase Act (Cap. 507) governs credit sale agreements. Forms-legal.com provides this template as a starting point for Kenya-compliant documentation.
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Forms Legal. (2026). Mobile Payment Merchant Agreement (Kenya) (Kenya) [Legal document template]. Forms Legal. https://forms-legal.com/kenya/financial/agreements/mobile-payment-merchant-agreement-kenya
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}Frequently Asked Questions
Mobile Payment Merchant Agreements in Kenya are primarily governed by the National Payment System Act No. 39 of 2011, which establishes the regulatory framework for payment systems and electronic money. The Central Bank of Kenya (CBK) is the designated regulator under the Act and has issued the National Payment System Regulations, 2014 (Legal Notice No. 67 of 2014), which set out the licensing requirements for payment service providers, the conduct standards for merchant relationships, and the minimum terms that must appear in merchant agreements. The Law of Contract Act (Cap. 23) governs the general contractual elements of the agreement — offer, acceptance, consideration, and enforceability. The Data Protection Act No. 24 of 2019 applies to the processing of customer payment data. The Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA) imposes anti-money laundering obligations on merchants handling large volumes of mobile money transactions. Specific M-Pesa merchant terms are also governed by Safaricom PLC's standard merchant terms approved by the CBK.
To register as an M-Pesa merchant in Kenya, a business must submit an application to Safaricom PLC or an authorised M-Pesa aggregator. The application requires a valid Business Registration Certificate from the Business Registration Service (BRS) or Certificate of Incorporation, a KRA PIN certificate, a copy of the business owner's National Identity Card (NIC) or passport, a recent bank statement for the settlement account, and a signed Merchant Agreement. Safaricom PLC processes Buy Goods (till number) applications within three to seven business days. Paybill numbers for utility collectors, schools, and larger businesses may require additional due diligence under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 and the CBK's Know Your Customer (KYC) guidelines. API integrations via the Daraja developer portal require technical onboarding and a separate API Merchant Agreement. The Communications Authority of Kenya (CA) also regulates the USSD shortcodes used by mobile money platforms, and merchants integrating USSD services must work with a CA-licensed aggregator.
Transaction fees for M-Pesa merchant payments in Kenya are set by Safaricom PLC and approved by the Central Bank of Kenya (CBK) under the National Payment System Act No. 39 of 2011. For Lipa na M-Pesa Buy Goods transactions, there is no merchant service charge — the customer pays a transaction fee to Safaricom based on the amount sent, and the merchant receives the full payment amount. For Paybill transactions, Safaricom charges the merchant a service fee typically ranging from 0% to 1.5% of the transaction value depending on the business agreement and transaction volume. Payment aggregators such as Pesapal, Cellulant, and Flutterwave Kenya charge their own merchant service fees on top of the mobile money operator fees, typically ranging from 1.5% to 3.5% per transaction depending on volume tiers and the mix of payment methods accepted. All mobile money charges are subject to the Excise Duty Act (Cap. 474) — an excise duty of 15% is currently levied on mobile money transfer fees in Kenya, making M-Pesa one of the most taxed payment channels globally.
When an M-Pesa merchant transaction fails or is disputed in Kenya, the resolution process is governed by the merchant's agreement with Safaricom PLC or the payment aggregator, as well as the Central Bank of Kenya's (CBK) Consumer Protection Framework for Digital Financial Services. A customer who pays via M-Pesa and does not receive goods or services may initiate a reversal request through the M-Pesa app or by calling Safaricom's customer care line (100 or 0722-002-100). Safaricom's standard reversal window is 72 hours for most transactions. The merchant's Merchant Agreement specifies the dispute handling procedure — typically the merchant is given an opportunity to respond with proof of delivery before a chargeback is processed. Unresolved disputes may be escalated to the CBK's Consumer Protection Department or to the Competition Authority of Kenya (CAK) under the Consumer Protection Act No. 46 of 2012. Merchants who believe a chargeback was wrongly applied may seek redress through the Environment and Land Court or the High Court's commercial division, depending on the nature of the dispute.
Yes. Mobile money merchants in Kenya who handle high volumes of cash-equivalent transactions are subject to anti-money laundering obligations under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA) and the Proceeds of Crime and Anti-Money Laundering Regulations, 2013. The Financial Reporting Centre (FRC), established under Section 21 of POCAMLA, is the competent authority for receiving and analysing suspicious transaction reports. Merchants handling transactions above prescribed thresholds — as set by the FRC — must file Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs) with the FRC. The Merchant Agreement with the payment provider typically incorporates the provider's Know Your Customer (KYC) requirements, which oblige merchants to identify high-value customers and retain transaction records for at least seven years under Regulation 16 of the POCAMLA Regulations. Non-compliance with POCAMLA can result in criminal prosecution, fines, and suspension of the merchant account by the payment provider under CBK direction.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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