Kenya's cash vs cashless minibus payment battle over by end of year, says Google

Google's BebaPay card uses Near Field Communication (NFC) technology to make transactions
Google's BebaPay card uses Near Field Communication (NFC) technology to make transactions

The rollout of a innovative new cashless payment system for minibuses in Kenya has been delayed, in what's seen as a fight between new technology and the infamous Matatus. The system was expected to have replaced cash by the start of July, but Kenya's National Transport and Safety Authority (NTSA) has backtracked on a sudden changeover after resistance from Matatu owners. For the moment cash and cashless payment systems will run in parallel. It is hoped that this new venture will help clean up Kenya's transportation sector improving tax collection, reducing the number of bribes, encouraging fair pricing and forcing operators to respect transport regulations. RFI spoke to Dorothy Ooko, Google Communications and Public Affairs manager for east and francophone Africa.


As the cash and cashless systems run in parallel there's a kind of incentive for the Matatu owners to continue taking cash.

Absolutely, that has been one of things that NTSA has also said that it will not be either or. If we are going cashless it has to be, so there's no option for anyone to say, “I don't want your card, I just want you to pay me cash,” which is what happens sometimes. The conductors and the drivers can decide. If it's late at night they can tell that the commuters have no other choice and they say, “Sorry we are not accepting cards now, just pay us cash”. The NTSA has made it very clear that it will not be an option and that's why they've extended it to give the service providers time, to also come up with guidelines on what will happen the day that date comes, what they expect. Will it be all cash or will it be payment cards? Once that is decided I think it will really be much easier because then it will be enforced. When government has a policy like this it really helps. It means that the government must come and be very firm in saying that it is going cashless and there's no other option.

How long would you like to see the parallel system run for?

The government did give a warning in November that this was going to happen in July. So there's been a lot of time given for this to happen and I would like to see a decision being made before the end of year. In September for instance, saying this is what is going to happen and this is how we are going to go ahead, this is how it is going to work. Running an awareness programme for commuters to understand what their right is, that no vehicle will force them to use to cash if what they want to use is a card. Therefore the government needs to decide whether an all cards system can work. Having a device that accepts all cards is necessary because that interoperability is what people have wanted and what service providers are asking for, instead of imposing one system.

Who do you consider your main competitors?

I think there are quite formidable players in their own right. So, the second player after we introduced our card BebaPay, the second player/entrant in the market, we have the Kenya Bus Service company, which is the longest, oldest running bus company in the country and they have a card called the Abiria Card. It's still not that popular. We’ve got Safaricom with M-Pesa and they have a product Lipa na M-Pesa where you then pay through your mobile. M-Pesa is quite ubiquitous in Kenya and very commonly used. They have many users who are already on it. And then there is a new one which was just introduced maybe a month ago, My1963, which is sort of brought from an amalgamation of the Matatu owners who are pushing for it. It depends, if you have a product which is pushed by the Matatu owners, probably that would then become more favourable for all public service vehicle owners because it's a card introduced by their association. But, yes, that's to see, so those are the players in the market.

You don't think it's problematic that you don't have a transport partner on board such as Kenya Bus Service or the Matatus Owners Association?

Actually not really, I think one of the key things, and part of it is regulatory, is that in order to have any cashless payment working you need to have a bank as a partner because they are regulated to be able to handle cash on transit. So, that's the key thing, if you do not have a bank working with you it's almost impossible to launch a product. For us that was the key thing and we chose Equity Bank because they have the mass market therefore it would be easy, they've got many agents that you'd be able to find. The idea is you can top-up either on your phone or you can top-up through M-Pesa as well, and you can top-up through any Equity agent, which you can find anywhere in town. So that was the core thing.

What other sectors do you think this model could be applied to?

Yes, we have a great example. So what has happened as well, we also started going to the universities and what has happened, we've got two universities - KCA School of Accountancy, a university in Nairobi, and we’ve got Strathmore College - who decided to pioneer with a card as payment. In university you need to buy books or you need to go to the canteen to buy food, you can use your BebaPay, top it up with the amount of money you need and then use it as payment. We found the universities really found it useful as well because in a cash-based economy, like most countries in Africa, the challenge is always no-one has change and then you end up using all this loose money that you don't know and you can't account for. How do you prevent these losses? At the university the students have found it really great, you just have that money, you can budget very easily, you know this is how much you use for your lunch and you know this is how much you need for your books, and you have the money there. That's the future. Transit was just a beginning. But I think that in Africa, it makes sense to also think of other sectors because it's really about making cash not the only way of payment but going to cashless.

Are you targeting any other African countries with the BebaPay system?

Kenya is our first country and this is where the pilot took place and for us this is also the learning place. So we are first of all going to ensure that the card is solid in Nairobi. Even in Nairobi it's not yet used by all bus companies, that's already the challenge, to make sure that in Nairobi it's used right across by all the bus companies. So that any transport, any commuter would be able to take any bus and be assured that they will be able to pay with their BebaPay card and after that groundwork we would then roll it out to the other big cities. Once we've seen that it's working very well in Nairobi, it's established, then go to the other big cities and then go to the country before taking it to another African country. People do find out, so our neighbouring country Uganda, a few transport vehicle owners, public transport, have come to us and said, “Yes, we'd really like to have this, would you be able to do that?” And we're just hoping that we work well on it in Kenya, roll it out in many other cities and then be able to take it out to other countries.

One of the so-called possible barriers to entry is the cost of the device for the trader who's accepting payments. How do you intend to overcome this? Will you be subsidising it for example?

For BebaPay right now if you sign in as a vehicle owner to use the device we give you the devices for free. Then any other that you need after that initial, you have to buy yourself. The NTSA, the National Transport and Safety Authority, was also saying that they wanted to ensure that the devices were kept affordable because they don't want that cost passed on to the commuters. They wanted it to be affordable. We changed a bit, when we started we used to use a phone, an Android phone that we gave to the bus owners or to the public service owners, and we found there was a lot of theft. The device would get lost because it's a phone that's used. Then we’ve replaced it right now with another device which has no street value. So if it got lost. If someone stole it, they wouldn't do anything with it. It would be totally useless to them.

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