Banks face-off with Safaricom over matatu cards

Corporate News

 

Matatu Owners Association chairman Simon Kimutai. PHOTO | SALATON NJAU |  NATION MEDIA GROUP

By KIARIE NJOROGE, gkiarie@ke.nationmedia.com

In Summary

• A planned launch of the new system on Tuesday flopped after it emerged that commercial banks did not recognise Safaricom’s My 1963 card- exclusively supported by the mobile phone-based payment service, M-Pesa.
• Inter-operability of the cashless payment systems was a key licensing condition that the Central Bank of Kenya had set for companies seeking to provide the service.
• Commercial banks have however argued that the security standard in Safaricom’s cards does not meet the banking industry’s threshold, hence the lock out.

Commercial banks are locked in a stand-off with Safaricom over the inter-operability of Public Service Vehicle (PSV) fare payment cards, stalling implementation of the much touted cashless system.

At stake is the fight for control of the more than Sh2.1 billion commissions that banks and telecommunication companies stand to earn by supplying payment cards to commuters.

A planned launch of the new system on Tuesday flopped after it emerged that commercial banks did not recognise Safaricom’s My 1963 card- exclusively supported by the mobile phone-based payment service, M-Pesa.

READ: Cashless matatu fares roll-out flops yet again

“Some of the other providers in the transport industry currently cannot accept My 1963 cards in their matatus and as such customers are inconvenienced when they board these matatus,” said Safaricom general manager for financial services, Betty Mwangi.

Inter-operability of the cashless payment systems was a key licensing condition that the Central Bank of Kenya had set for companies seeking to provide the service.

Commercial banks have however argued that the security standard in Safaricom’s cards does not meet the banking industry’s threshold, hence the lock out.

The Safaricom cards are not Europay, MasterCard and Visa (EMV)-based, which is a new global standard that is said to be more secure than the magnetic stripe and other cards that have been in use.

The stand-off means that PSV commuters cannot use a single payment card in any matatu that they board and may be required to have multiple cards for the migration to be successful.

Speaking at the Tuesday launch, KCB Bank head of channels Dennis Njau said the lender’s system is inter-operable with all cards issued by banks and can be read by all MasterCard branded terminals.

He was however non-committal on whether the KCB system would accept cards that do not conform to the EMV standard, saying the bankers’ main concern is security of customer’s money.

Equity, Co-operative and Family banks are the other main lenders interested in the cashless system.

“As soon as they have that bit fixed they can speak to our systems,” said Mr Njau.

“We would be happy to have them as chip and pin. This country is under an EMV mandate for the banks and it might be important for you (parties) to conform to that standard.”

On Tuesday, a pilot for cashless payments for buses operating from Ambassador, Kencom and GPO bus stops flopped due to the inter-operability difficulty.