An M-Pesa agent (right) serves a customer in Nairobi. The Central Bank
has allowed Safaricom to offer the service in PSV cashless fare
payments. PHOTO | FILE | NATION MEDIA GROUP
Safaricom’s
move to use M-Pesa to offer cashless fare payment got a boost last week
after the mobile phone firm received Central Bank of Kenya’s approval.
The banking regulator gave Safaricom the nod after it partnered with
third parties to allow the Lipa na M-Pesa mobile payments system issue
physical receipts.
Regulations guiding the rollout of
the cashless fare system demand that commuters be issued with receipts
after using their prepaid cards.
“Central Bank approved
Safaricom as one of the cashless service providers on Wednesday and we
expect the NTSA (National Transport and Safety Authority) to issue a
notice next week,” said an executive at Safaricom on condition of
anonymity without giving details. “We have partnered with some
innovators and our system is now compliant with the receipt
requirements.”
This will be put Safaricom in a head-to-head battle with three commercial banks – KCB Group, Co-operative Bank and Equity Bank
– that on September 19 were approved to offer the cashless service. At
stake are annual revenues exceeding Sh2 billion that will be generated
for processing fare payments for the public service vehicle (PSV)
operators.
Safaricom had in December registered more
than 1,300 matatus and taxis on its Lipa na M-Pesa platform ahead of the
July 1 deadline banning the use of cash in public transport fare
payments. The deadline has since been pushed forward to December 1.
Safaricom
in June said it was upgrading the Lipa na M-Pesa platform to allow it
send a message to a terminal that will produce a receipt.
Equity
has launched a cashless payment product dubbed Beba Pay in partnership
with Google while Hong Kong firm Tap-to-Pay has partnered with KCB Group
and Mastercard with their pre-paid plastic called Abiria Card. Beba Pay
and Tap-to-Pay generate receipts after each transaction.
Firms
seeking to offer the cashless fare payment will have to seek approval
from the CBK to safeguard commuters’ deposits, ahead of the December
deadline.
Safaricom launched Lipa na M-Pesa to enable
cashless merchant payments and further drive its quest to reduce
reliance on the voice business, which now accounts for about 59.6 per
cent of its sales.
M-Pesa revenues stood at Sh26.5
billion in the year to March, up from Sh21.8 billion last year and
Sh11.7 billion in 2011. The mobile phone operator has ambitions to turn
M-Pesa into Kenya’s primary payment platform, prompting its vicious
fight with Equity Bank.
The bank is seeking a larger
share of the cash transfer market and piece of the voice business using
its own overlay thin SIM card technology that Safaricom is opposing.
Regulators have allowed Equity to operate the thin SIM in a one year
pilot.
But its popularity has strained the platform on
which the service now runs, causing occasional shutdowns and requiring
routine upgrades to its capacity, now at 250 transactions per second.
China’s Huawei has been building a second-generation platform to
increase capacity to 600 transactions a second.
Safaricom
is betting on its subscriber base for a larger share of the cashless
fare market. The cashless fare system is expected to curb erratic
increases in fares and enable Kenya Revenue Authority collect taxes from
the industry.
The country has more than 22,000
licensed PSV operators, according to the traffic licensing board.
Official data shows the public transport industry generated Sh218
billion in revenues last year, up from Sh205 billion in 2012 and Sh155
billion in 2009.
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