Directline Assurance Mandates PSVs to Adopt Cashless Payments

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Cashless PSV matatu payment system

An Auto insurance company in Kenya is making it mandatory for all Public Service Vehicles (PSV) seeking it’s Auto insurance policy to go cashless. Directline Assurance, released a statement yesterday saying it “will provide the technology for the consolidation of the same.”

The insurance company has set the 1st of February, 2024 as the deadline.”The company will ONLY issue policies to PSV vehicles that have a registered digital payment method from any of the payment gateways e.g. Mpesa Till, available in the country.” reads part of its statement.

The company wants PSV policyholders to adopt a digital passenger manifest for verifying claimants post-accident. Directline believes this will ensure a streamlined injury claims management process and timely response to Small Claims Court timelines.

The insurer has made the move in order to curb fraudulent claims from accident injuries and deaths to passengers.

Previous Attempts to Make Industry Cashless

Cashless payments for privately owned public transport have been tried in Kenya before with little success. In June 16 2020 , the National Transport and Safety Authority (NTSA) sought tech companies to install mobile and web apps for nearly 200,000 matatus in the country. Firms that formed part of the cashless fare system included Safaricom, Craft Silicon, JamboPay, Cellulant, KCB and NCBA.

We have also seen other attempts apart from cashless fares issue like Smart Matatu with the idea of taming the Kenyan Public Transport Industry using IoT. The sector is a cashflow intensive business that needs instant settlement and liquidity. The cashless systems couldn’t satisfy this need.

It remains to be seen whether Kenyan PSV will heed Directline’s directive or jump ship. Further, this could be a precedence that finally sees the matatu industry go cashless. The PSV sector has Buses, minibuses (matatu), Taxis, and Bids bodas.

The mandate also comes at a time when Kenyans are somewhat reluctant to use mobile money. The 0.5 percent growth in transaction value in 2023 is the smallest growth rate since the service’s 2007 introduction. Increase to a 15 percent excise duty on transaction fees, up from the previous 12 percent is seen as the main cause.

Business owners have also been ditching mobile money payment services due to fear of government scrutiny. Further, the assurance of having funds in one’s mobile wallet has been disrupted with recent unexplained M-pesa outages.