How COVID-19 is a Catalyst for a Sane, Cashless Matatu Industry


Soon, public transport in Kenya will be taking bus fares in the form of digital payments if the proposed digital fare collection system will be approved. The payments platform is fronted by transport regulator NTSA following COVID-19 cases whose numbers have been increasing locally.

The proposal, which has since been published and has called for bids from tech companies to develop and install mobile software and web apps for hundreds of thousands of matatus in the state, can be viewed as a second state-backed attempt to fully furnish the matatu industry with a digital payments system after the failure of My 1963 Card that was launched back in 2014.

According to an extensive report published by Business Daily, once the system is deployed, all passengers will be required to pay bus fare using mobile money solutions. The government can then use this information to track their movement in an attempt to manage, and possibly combat the spread of the virus.

The NTSA says that should the system go live, then all travelers will be compelled to use the platform. The overall goal here, to this end, is to track the virus in an effort by the government, among other organizations, to fix the Coronavirus pandemic.

Technology firms interested in developing the system have been asked to send their bids before June 16, 2020.

Our take

Money has always been known to be dirty because it is laden with bacteria, viruses, and drugs, name them. The current problems of COVID-19 that have brought the world to a standstill continue to put a notable emphasis on disease transmission and contact tracing through hard cash. Back in Feb 2020, China announced that it was destroying and disinfecting cash to help stop the spread of the virus.

The development begs the question: does the pandemic make it yet another case for digital payments, especially for Kenya where such attempts have seen notable success in the mobile money space, but still rely on hard cash for day to day payments such as the aforementioned case that is calling for digital payments for bus rides?

We tend to think that there is no technological obstacle to installing the said system in Kenya, only political and regulatory adjustments are needed. we say this because the state has been known to be lax in terms of adopting better and tech-based solutions and products (refer to the hostility between traditional taxi services and e-taxi apps, and the recent tussle between NTSA and e-bus services such as SWVL that has since been resolved).

To this end, it is apparent that the regulator is trying to adapt a framework as a new digital system that is targeted to encourage cashless bus fare payments.

We are also seeing the system being a sovereign digital fare collection platform, which, as expected, will be regulated by the state with all transactions recorded and policed to identify patterns, which in this case is tracking cases of the spread of the virus, and fixing them accordingly.

The platform is going to be a win-win, but there are forces that are often resistant to change. You ask, who stands to lose most from doing away with the status quo and adopting the system suggested by the NTSA? In the last case, matatu owners were against the system because they argued the system was deployed to monitor their earnings for unfair taxation by the KRA.

Also, there is a case of commercial banks, whose existing business models could be affected by a fully digital system (maybe due to reduced fees). It is also not farfetched that some elements of the state may have been against the system because they perceived the system as a threat to existing monetary systems.

Nevertheless, there is always a flip side to this: the state stands to gain, not lose, control as – unlike with hard cash – with a digital system since all transactions are recorded and the information is usually available to regulators.

It would be challenging to imagine a mass adoption of the system proposed by NTSA without support from the state with streamlined rules and regulations.

There is no better time for the implementation of a digital fare collection system. It has been proved before that challenging times, or necessity, have pushed invention to greater heights.

During the 2007/2008 PEV, M-PESA picked widely. People were sending money to friends and family, which prompted the establishment of thousands of M-PESA agents. The development saw the growth of the platform that has since been updated with tens of products including it being a payments as a platform for bill payments, savings, and credit, to mention a few.

Heck, the same platform is currently being used by City Shuttle buses where customers are paying fares using a pay bill number to stop the use of cash because of the virus.

Finally, while the state stands a chance of contact tracing using the proposed digital fare collection system, it will also offer a catalyst for digital money growth, and perhaps bring some sanity to a chaotic matatu industry.