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Fresh bid for cashless fare payment in matatu sector

Wednesday, January 19th, 2022 10:16 | By
A photo file of Matatu's operating in Nairobi. PHOTO/COURTESY

The planned use of a cashless payment system among passenger service vehicles (PSV) is likely to return nearly 10 years after similar move famously flopped.  

An attempt by the government in November 2014 to have owners of public service vehicles (PSV) switch to electronic fare collection collapsed following strong opposition from matatu operators who felt the move was a ploy to monitor their daily earnings for taxation purposes.

However, industry stakeholders and tech providers now say the market has matured for such innovation after its suspension for several years and whose appetite, according to them, has been resuscitated by Coronavirus pandemic experiences.

“We have been engaging directly with chairmen of matatu saccos and the desire is there, the attitude has tremendously changed which is a departure from the chaotic noise we come across then.

That time the market was not ready,” said the Matatu Operators Association Chairman Jimal Ibrahim. Moving to a cashless era by stakeholders, according to him will however, need the State’s backing if the idea is to succeed this time around.

The market is hopeful its implementation can be undertaken by year end. “The engagements by other stakeholders and the government have been successful but we need more authority from the Ministry of Interior,” said Ibrahim, who is also the chief executive of Huduma Credit, a new financial solution offering cheap loans tailored for PSV vehicles.

The digital payment system requires passengers to get pre-paid cards or use mobile money for payment of fares in PSVs, but the move is still opposed by a section of operators with stickers labelled, Hakuna kulipa na M-pesa, a Swahili phrase loosely translated to mean no mobile money payments, often seen inside some matatu vehicles.

Those plans are also being backed by Nick Mwendwa – whose firm Riverside Solutions - at the time had partnered with KCB Bank to unveil KCB Pepea card whose introduction coincided with the launches of similar platforms such as BebaPay (run by Equity and Google), Abiria (Kenya Bus Service), Tangaza Pesa PSV card and Co-op Bank’s M-Nauli.

Collection system “We have the technology ready, this is an innovation whose time is ripe now that the stakeholders seem to be embracing it at this point. We have the devices and gadgets just awaiting the rollout,” said Mwendwa.

If endorsed, a digital fare collection system is expected to restore sanity in the chaotic sector and eliminate criminal cartels in the PSV market that continue to hold back such innovative decisions owing to its technical capability.

Further the move is hoped will for the first time provide Kenya Revenue Authority (KRA) with a platform to track and trace incomes in a sector that grosses more than Sh1.02 billion daily or Sh30.6Billion every month and Sh368 billion annually.

The digital fare collection is also expected to eradicate employee fraud by matatu touts, according to Sam Nyandemo – an economist who says such a move would also help vehicle owners track payments in real time.

“This is long overdue, Covid-19 came with a lot of lessons where most Kenyans had familiarised themselves with mobile payments to help curb the virus spread,” said Nyandemo in a telephone interview.

Money collected through the PSV eticketing system was to be remitted in a bank, making it easier for vehicle owners to access loans through credit unions and other financial institutions offering such products at affordable rates.

Pioneer financial solution providers such as Huduma Credit gives out loans to PSV at a cheaper rate of 5 per cent compared to other lenders offering between 9 and 13 per cent rate.

“In two years we are hopeful this platform can grow to become a bank specifically for the PSV market, a first in the market,” Ibrahim said.

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