Politics and policy
National Transport and Safety Authority boss Francis Meja interacts with
travellers during a recent safety drive in Nairobi. Gerald Anderson
By GERALD ANDAE
In Summary
The introduction of cashless payment is part of a wider strategy by the government to streamline the chaotic matatu industry.
The plan to ban the use of cash in public transport
services from Monday has been delayed following concerns that the
country is not ready.
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National Transport and Safety Authority director-general
Francis Meja said yesterday that commuters would use both the cashless
fare payment and money for the transport bills for unspecified period.
The authority early in the year had set a deadline of July 1 for the
switch-over.
“We don’t expect the cashless payment system to be
100 per cent by the Monday deadline,” said Mr Meja yesterday in a phone
interview. “We will monitor its uptake from next week and from there
will determine the new switch-off date. It’s not a one day cut-off but
journey.”
Regulations guiding the cashless fare payment were
released two weeks ago and they demand firms seeking to offer the
service to seek approval from the Central Bank of Kenya to safeguard
commuters’ deposits.
Mr Meja said that the banking regulator was
expected to give four firms the green light by yesterday evening. The
system enables commuters to pay their fare automatically by tapping
their prepaid cards on electronic devices.
The rules also required the pre-paid passes to be
in line with the high security debit and credit cards being issued by
banks, which are replacing the magnetic strip-type card that is prone to
fraud. The new generation cards are chip-based.
A number of firms, including Safaricom — the provider of Lipa na M-Pesa — have introduced cashless payments.
But Safaricom’s move to use Lipa na M-Pesa to offer
cashless fare payment service faces a hurdle for failure to issue
physical receipts. The cashless fare system demands that commuters be
issued with receipts after using their prepaid cards.
Safaricom said that it was upgrading the Lipa na
M-Pesa platform to allow it send a message to a terminal that will
produce a receipt. Others are Google in partnership with Equity (Beba
Pay) and a Hong Kong firm Tap-to-Pay that has partnered with KCB Group
and Mastercard with their pre-paid plastic called Abiria Card.
Matatu operators under the investment vehicle
dubbed Compliant MOA, which plies Jogoo Road, Eastleigh and Ngong Road
in Nairobi, are served by 1963 Jinice.
These firms stand to rake in at least Sh2.18
billion annually in revenue by processing fare payments for public
transport vehicle operators for a one per cent commission fee.
Official data shows Kenya’s public transport
industry generated Sh218 billion in revenues last year, up from Sh205
billion in 2012 and Sh155 billion in 2009. The introduction of cashless
payment is part of a wider strategy by the government to streamline the
chaotic matatu industry.
The multi-billion-shilling untaxed industry has
more than 22,000 licensed PSV operators, according to the traffic
licensing board.
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