[kictanet] Who will be the winner in cashless payment for public transport sector?

[emuchiri at andestbites.com]

>WHO WILL BE THE WINNER IN CASHLESS PAYMENT FOR PUBLIC TRANSPORT SECTOR? 

Telecoms and financial institutions are likely to be at the centre of
the new transition to a cashless payments. Regulations by the Cabinet
Secretary for Transport and Infrastructure will see all public service
vehicles required to use an electronic payment system starting 1st July
2014. Equity Bank and Google BebaPay prepaid plastic card launched in
1Q13 has made some inroad in payments but no data is currently publicly
available on the number of users and volumes. Safaricom has registered
over 1,300 public transport vehicles and taxis in its Lipa na M-Pesa
platform. Either way, cash payments are still the predominant mode of
payment for public transport. 

There are currently over 22,000 public transport vehicles and around
1.5m journies daily in Kenya by our estimate implying a wide gap to
achieve full penetration. Cash payments pose a number of challenges to
authorities with tax compliance, corruption and money laundering ranking
high in concerns. The Economic Survey 2013 values Kenya's road passenger
transport business at KES 205 bn. The new rules on cashless payments
will pit financial companies and telecoms which will bid to dominate the
payments made in the sector. 

In China, China UnionPay and China Telecom, the largest players in their
respective markets agreed to a comprehensive cooperation agreement with
the aim to conducting an all-round cooperation in the financial payment
and communication service areas, jointly expand the bankcard application
in the communication and e-commerce fields and elevate the service level
of the financial payment which is based on the communication network.
Particularly, the partnership between the two big companies is expected
to create a synergy in the mobile payment domain and co-promote the
development of the mobile payment industry. We believe that this will be
what will happen in Kenya where financial institutions will use the wide
reach of telecommunications companies to reach the consumer. Whereas the
urban public transport regulations now only require paper ticketing, we
see an evolution where a personal smart chip card will eventually become
a standard. 

(KNBS, Business Daily, Standard Investment Bank) 

 
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