The Central Bank of Kenya (CBK) has accused Nairobi-based payment services provider Mobile Pay Ltd of failing to comply with national payment service and system policies and regulations, and this week revoked the company’s license.

According to the CBK, Mobile Pay Ltd (which operates the Tangaza telecommunications brand) failed to submit audited annual financial accounts of its business as well as that of the Trust Fund (Tangaza Trust), quarterly reports and an annual systems security audit report.

As is legally required, CBK assumed control of MPL to safeguard and facilitate the distribution of the money in the Trust Fund.

“CBK will undertake a reconciliation of MPL customers’ balances against the Trust Fund accounts, and then commence reimbursing the customers. Pursuant to Regulation 10(9), the Trustees are personally liable for any shortfall in the Trust Fund. The reconciliation is expected to be completed within two weeks,” the CBK stated.

MPL has just 0.01% share of the market and the current situation is an example of the increased level of challenges faced by smaller operators competing in Kenya’s mobile money service space.

Nairobi-based telecommunications engineer and cloud and datacentre architect Tom Makau commented: “The problem that I have seen with small MNOs is they are dependent on regulation to aid them to capture the market. Regulatory tools such as Infrastructure sharing, MVNO licensing, mobile number portability and others have not yielded the results that were expected and this has left many small operators with no additional tricks up their sleeves to gain a foothold in the market.”

However, newer emerging technologies do offer smaller operators a lifeline.

Makau added, “With the advent of new approaches and technologies such as Network Function Virtualisation, Open RAN and the ability to run most of the traditional telco services on the cloud, the barriers to innovation have been lowered and minimized operating costs.”

“For example, instead of focusing on B2C, as is the case, smaller MNOs can focus and play at the B2B level and set up and lease their networks to others, especially larger players.”

Mobile Payment Ltd. could not be reached for comment at the time of publishing and has yet to issue an official statement.