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Kenya losing out on electronic payments

CARTOON
By | June 21st 2011

By Macharia Kamau

Kenyan firms are missing out of the credit and debit card boom by failing to embrace technology.

Tourists coming to Kenya are increasingly using credit and debit cards to pay for services offered by hospitality industry but because industry players, especially small and medium companies, have not aligned their trading to electronic payment platforms, they are missing out on the boom.

Tourists to the country last year spent Sh30 billion ($370 million) using Visa credit and debit cards. This is a significant rise compared to previous years, where card transactions by visitors to the country were valued at $150 million annually.

The growth has partly been due to a recent revision in law that allows Kenyan firms to participate in e-commerce. The amendment to the Kenyan Communication Act now allows Kenyan firms to engage in e-commerce and accept card payments. This also allows tourists to pay for services before leaving their home countries.

Claire Olvermac of Visa Inc says the country could rake in more than the $370 million paid through cards if more players accepted electronic payments.

"A majority of payments made electronically are not made to Kenyan companies. They are made to companies abroad, prior to arriving at destination," she said.

Accept payments

"So, an increase in Point-of-Sale locations, e-commerce in Kenya and increased ability for local tourist operators to accept electronic payments would yield higher percentages of tourism profits directly to Kenya."

According to Visa, 30 per cent of $370 million was used to pay for airfare and accommodation before the tourists’ arrival to Kenya. A further 57 per cent were cash withdrawals while in Kenya, and only a small fraction was used to pay for goods sold by Kenyan retailers.

Olvermac, who spoke at an e-tourism conference, noted that a big proportion of tourism industry players in Kenya do not accept cards, and the few that do fail to advertise this fact when marketing their products and services.

"Most travellers opt to use cash and this limits the spend by tourists to Kenya who are used to making payments using cards back home," she said.

Olvermac added that other than payments, Kenyan firms had also lagged behind in marketing their services using the Internet.

"In today’s world, a single click on the Internet is the start of a consumer’s journey. Potential travellers searching the web have access to much more travel information sites by national tourism authorities or research sites run by airlines and travel agencies," she said.

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