The Central Bank of Kenya (CBK) has outlined plans to enact e-money and digital wallet compensation guidelines to enhance consumer protection.
The initiative is set out in the Kenya National Financial Inclusion Strategy 2025-2028, and follows a rise in fraud particularly targeting mobile money wallets.
The CBK has identified the lack of clear recourse mechanisms for digital wallets as an issue that needs to be addressed.
The apex bank is seeking to work alongside other financial sector regulators and the Competition Authority of Kenya (CAK) to develop a compensation framework by the end of 2026, to improve safeguards for users of digital financial services (DFS).
“The framework highlights capacity building among market players, deployment of digital complaint management systems and enhanced transparency in pricing,” CBK says.
“Key performance indicators include reduction in the number of unresolved consumer complaints and increased awareness of financial rights among the population.”
A 2021 consumer survey, the Digital Credit Market Inquiry, which was conducted by CAK and research firm Innovations for Poverty Action (IPA), found that fraud in mobile financial services has emerged as a key risk for consumers and can take many different forms.
Eighty-two percent of respondents said they had received a call or text from an unknown person asking for money or sensitive personal information or offering a product or service.
“The vast majority or 77 percent of scammers asked consumers to send money for a variety of reasons — for example, to reverse what appeared to be money sent to the consumer in error, but which was in fact fake,” the survey said.
Other common requests included asking for a password or PIN (21 percent), personal information (19 percent), or account details (13 percent).
According to the study, most scammers do not identify themselves; however, those who do claim to be employees of a financial service provider (FSP), suggesting that systems to help verify the legitimacy of communications from FSPs may be beneficial.
The report does not, however, quantify the size of funds lost to fraud across digital financial services.
Findings from the CAK survey have been corroborated by the 2024 FinAccess Report, which shows that respondents reported mobile money as having a greater incidence of money lost and incidents of frauds at 9.8 percent.
The likelihood of fraud affecting customers of banks and microfinance institutions was lower at 1.5 percent and 1.8 percent respectively.
“Regarding money loss, respondents cited various incidents. Internal fraud in Saccos and pensions schemes was the most prevalent at 75.1 percent and 66.1 percent, respectively, while accidental sending of money was prevalent in mobile money services at 70 percent,” the FinAccess survey stated.
Money lost was identified as the fourth most significant challenge for consumers of financial products and services, after unexpected or hidden charges, unethical practices, and system downtime.
