Africas leading resource for digital financial services
KENYA:Authority plans common cashless PSV fare system
APRIL 04,2014.
BUSINESSDAILYAFRICA.
The National Transport and Safety Authority (NTSA) is considering integrating cashless fare payment systems from different service providers in the public transport sector.
A number of firms including Safaricom(Lipa na M-Pesa), Google in partnership with Equity (Beba pay), a Hong kong firm TapTopay that has partnered with the Kenya Bus Service (KBS) to pilot the pre-paid plastic called Abiria Card have introduced cashless payment methods ahead of a planned government ban on cash transactions on public transport from July.
Visa is also reported to be eying a piece of the Sh205 billion Kenya public transport industry with a cashless payment product that is yet to be introduced into the market.
These providers, however have not signed up with all public vehicles in the city, a failure that NTSA says may force commuters to invest in multiple cards and cause inconvenience to the public.
NTSA chairman Lee Kinyanjui said in an interview with the Business Daily that the agency had formed a committee comprising the service providers and transport stakeholders to come up with an integrated cashless payment system.
“What we initially envisaged was to introduce a cashless payment system in the country but as providers started rolling out their products we realised that there is a need to have these products integrated to save the commuters from investing in multiple cards,” Mr Kinyanjui said.
“The need for integrating this system is critical and that is the reason we have formed a task force to come up with a solution,” he added.
In the current form, a commuter who has invested in Google’s BebaPay and travelling to a part of the city that is dominated by Kenya Bus Service (KBS) may be forced to buy both the BebaPay and the Abiria card— exclusively used in KBS buses.
BebaPay, launched in April last year, has so far signed up about 650 buses and matatus. Safaricom says it has assigned M-Pesa paybill numbers to about 2,500 matatu operators under the Lipa Na M-Pesa service.
Global payments processing firms Visa and MasterCard have also announced plans to roll out similar cards, highlighting the increased interest in digitising Kenya’s chaotic matatu industry.
These firms stand to rake in at least Sh2.05 billion annually in revenue by processing fare payments for PSV operators for a one per cent commission fee.
Some of the routes using BebaPay are Ngong Road (111, 24, 46), Jogoo Road (34,23) Thika Road (45), Waiyaki Way (105) and Mombasa Road (34). The bus companies using the service are MOA Compliant, Citi Hoppa, Kilele, Zamzam, Unified, MetroTrans, 105 Sacco, Sunbird, Chania Shuttles, Mwi Sacco, MSL Transporters, Rockers and Paradiso.
The introduction of cashless payment is part of a wider strategy by the government to streamline the chaotic matatu industry.
The system, among other things, is meant to curb erratic increases of fares based on weather patterns, traffic flow and other considerations and enable the Kenya Revenue Authority KRA to collect taxes from the industry.
The country’s multi-billion untaxed industry has more than 22,000 licensed PSV operators, according to the traffic licensing board. Bus owners on the other hand will be able to track earnings online through a dashboard thus making it easier to analyse their businesses.
“Most bus travel involves cash payment and paper tickets. Users often have to carry loose money or change. To help solve these problems, Google developed the BebaPay project as an experiment to enable electronic bus ticketing,” Dorothy Ooko Google’s Public Affairs and Communications Manager for East and Francophone Africa said.
The government has gazetted regulations that will outlaw use of cash for bus fare starting July.
Edwin Mukabanah, managing director of KBS, in a previous interview with Business Daily said the firm will invest about Sh270 million in the automatic fare collection system for its fleet of 272 buses by the end of this June.
The system is being piloted using 5,000 Abiria cards on 50 KBS buses. KBS said it will run the NFC system parallel to electronic ticketing system for cash payments from commuters who may not have acquired the smart cards.
“We have decided to combine card payments with electronic ticketing, which will all be captured at a central server. This will also provide a window for full migration to card payments,” said Mr Mukabanah.
“There is growing appetite for the Abiria Cards by commuters as it allows them to budget for their travel.”
comments