When Uber launched in Nairobi it quickly realized that card payments were not popular. This led to Nairobi becoming the second city in the world where Uber introduced a cash payment option, after first introducing it in Hyderabad in India.

This single move tripled Uber’s growth in Nairobi in just a space of two months.

A year earlier, the government of Kenya had tried to force a cashless payment system for public transport, through legislation. This was in an attempt to bring order in the industry, although the bigger motivation was the taxes that could be collected if the $2 billion industry became more transparent. The idea brought in big guns like Google and MasterCard, in partnership with local firms such as Safaricom, KCB and Equity Bank. Needless to say, the initiative flopped dismally.

The problem with cashless payments

What is the problem with cashless payment in a country that leads the world when it comes to mobile payments and a city that is known to be good in adopting innovations?

The cashless transport initiative was designed to solve a problem that only existed for only some people, not all stakeholders. The government was interested in taxes. The public service owners were interested in creating a form of accountability from their employees (drivers and turnboys). The technology companies were interested in earning some revenues. The civil society wanted to eliminate bribery that is given in form of cash.

However, there were three main stakeholders who possibly had nothing to gain; public service vehicle operators, traffic laws enforcers, and the passengers.

Nothing to gain

The public service vehicle operators are paid by the vehicle owners, but also pay themselves from the money they collect. This motivates them to work harder, break rules, and even carry excess passengers.

The fact that the owner cannot tell how much money they collect makes it easy for them to withhold some money. Introducing a cashless system would work against them.

For the traffic police, one can argue that their main work on the roads is to collect bribes. Getting cash out of the way means that they have nothing to eat. As the people who were supposed to oversee the enforcement of these laws, they had too much to lose if the project was successful.

The third stakeholders were the passengers. First, this was not a major problem being solved, because majority of them were okay paying in cash. In any case, only short distance public vehicles require you to pay during the journey. Majority of the long distance vehicles require one to pay in advance while booking. Using a card meant having an extra tool to carry or forget, and a need to monitor the balance. It would take a lot of effort to change the culture and instill a habit of cashless payments for public transport.

With that, the project collapsed.

Going forward

There is still hope that one day Kenya will implement a cashless transport system. Rwanda is successfully doing this, and this can be a place to benchmark.

One place that can be used to pilot and run the system is in the proposed Bus Rapid Transport (BRT) system. The passengers will be motivated enough to use the cashless system because they will be benefiting from a faster means of transport. Once successful, it will be possible to implement the system elsewhere.

To deal with public service operators, a different mode of remuneration can be implemented, where a commission based salary is implemented. This would reduce the need for secrecy in the earnings, and make them more open to accepting a cashless system.

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