More firms angle to tap into cashless matatu payment system

By Macharia Kamau

Kenya: Matatu operators are banking on the migration to electronic payment of bus fare by commuters to weed out cartels within the industry.

This will also reduce by huge margins, instances of matatu crews bribing police officers. The National Transport and Safety Authority recently issued regulations that require all Public Service Vehicles (PSV) to use a cashless fare system beginning July 1.

Matatu Owners Association (MOA) says the move will increase their revenue and reduce on cash lost to cartels and corrupt police officers. MOA Chairman Simon Kimutai termed cashless fare systems as ‘the best thing’ to happen to investors in the industry. Kimutai pointed out that matatu owners lose more than 30 per cent of the revenue earned to cartels and traffic police officers. The fact that matatus are always liquid in terms of cash has always been an attraction. 

“Rarely do you ever get 100 per cent collections. The police, cartels and even your own matatu crew usually target the revenue. At the end of the day, an operator can lose as much as 30 per cent of the revenue… the amount lost could be more because we really cannot tell how much revenues they get in a day,” he said.

“It is the best thing that can ever happen to operators because as an operator, you will get your cash intact.  With the cashless system, the drivers will no longer carry cash and it could bring down corruption on roads by 70 per cent.” The planned migration from cash to virtual payments has seen an increase in the number of players positioning to cash in on the cashless fare system. Among the recent entrants is a local technology firm Pesa Print that has locally developed a cashless payment platform. The platform uses near field (NFC) communication technology to process payments.

Automatic deductions

The ‘tap and go’ system enables commuters to tap the prepaid cards on NFC enabled phones and the fare is automatically deducted. The firm said it is currently piloting its system with a number of PSV operators within Nairobi.

“The major impact of having cashless systems is to bring sanity into the chaotic industry and make the investor in charge of their investments,” said David Ruiyi co-founder Pesa Print. “As it is, the owners are usually at the mercy of the matatu crew… it is difficult to tell how much a matatu makes in a day and the owner may be getting half of what they should be getting. With the cashless systems, they will be able to tell the revenue collected in a day.” 

With Numerous cashless pay systems being launched in the market eyeing the migration to the electronic fare system, there are concerns that PSV operators might be compelled to install multiple systems that might force commuters to carry several cards. MOA has already made a proposal to NTSA to ensure that the systems are inter-operable.

NTSA said it is keen on the issue. “Our system can accept payments from other systems… if other players are willing to inter-operate, our system can accept their payments. This will ensure the interests of the consumer are taken care of, and they do not need to have multiple cards for to pay for fare while commuting,” said Ruiyi. The firm also offers a route and fleet management system.

“A matatu owner can track in real time where the vehicle is, where they make stops or the high collection points. It allows the investor to easily undertake an audit of how his matatu is performing,” he said.

Other firms eyeing a piece of the pie include Cooperative Bank, Safaricom’s M-pesa, 1963 Jinice and Bebapay card - a joint effort between Google and Equity Bank that is already in the market. Family Bank is also targeting a pie of the transport sector with the optimisation its PesaMob virtual bank account to act as a cashless payment option for PSVs.