Strategic Exit from a Competitive Market

The Central Bank of Kenya (CBK) has officially revoked the operating licence of digital payment provider PayU Kenya Limited, cementing the firm’s exit from the East African nation. The revocation, effective Friday, October 13, 2025, was announced by CBK Governor Dr. Kamau Thugge and follows a voluntary decision by PayU to cease its Kenyan operations and enter liquidation.

In a statement released on Friday, October 24, 2025, the CBK confirmed that PayU had applied to terminate its business after its board reviewed the company’s strategic direction. The regulator assured the public that PayU had met all its legal and regulatory obligations, including the full settlement of customer funds, prior to the licence cancellation. “Following the exit of PayU from Kenya… the public is hereby notified that PayU will no longer conduct the business of a payment service provider in Kenya,” the CBK stated.

Global Restructuring and Local Pressures

PayU Kenya, a subsidiary of the Netherlands-based fintech giant PayU and owned by global internet group Prosus, began liquidation proceedings in August 2025. The company appointed Sonal Tejpal as the liquidator on Tuesday, August 19, 2025, under Kenya’s Insolvency Act, citing unsustainable market conditions and high operational costs.

The departure is part of a broader strategic realignment by Prosus, which has been streamlining its global fintech portfolio to focus on larger markets in India, Latin America, and Europe. This restructuring has seen the company scale back operations in several smaller African markets. Despite its exit from Kenya, PayU remains active in other major African economies, including Nigeria and South Africa.

The Challenge of Kenya’s Payments Landscape

Launched in Kenya in 2019 through a partnership with local payments firm Cellulant, PayU aimed to provide a unified payment gateway for online merchants, integrating mobile money, card payments, and bank transfers. However, the firm struggled to gain significant market share in a landscape overwhelmingly dominated by Safaricom’s M-Pesa, which controls over 90% of mobile money transactions.

Industry analysts note that PayU’s exit underscores the significant challenges foreign fintech companies face when entering Kenya’s unique and highly competitive ecosystem. Factors contributing to its struggles included low brand recognition, the high costs of regulatory compliance, and a failure to sufficiently adapt its products for a mobile-first consumer base. The dominance of established local players like M-Pesa, Airtel Money, and aggregators such as Pesapal and iPay created formidable barriers to entry and scale.

The CBK has also increased its oversight of the payments sector under the National Payment System Regulations of 2014, tightening compliance requirements related to anti-money laundering and data protection laws, which can increase operational complexity for new entrants.

Implications for Kenyan E-Commerce

PayU’s departure leaves a vacuum for the merchants who relied on its platform, forcing them to migrate to alternative payment gateways. This transition presents both challenges, such as potential service interruptions, and opportunities for local and international competitors like Flutterwave and Cellulant to capture new business. The exit serves as a critical case study for global fintechs on the necessity of deep market localization and the difficulty of competing with entrenched, culturally integrated mobile money systems. For the Kenyan market, it reinforces the enduring strength of local payment solutions while highlighting the ongoing evolution of the regulatory and competitive environment for digital finance.