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Equity targets retail business with 300,000 smartphones

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Equity Bank chief executive James Mwangi. Photo/FILE

Equity Bank will from next month issue 300,000 smartphones to retailers to facilitate cashless transactions and deepen use of the lender’s new ATM cards that allow tap-and-go payments.

The top-tier lender said that customers would tap their Equity MasterCard cards on the high-end-of-the-market mobile phones with contactless payment technology based on Near Field Communication (NFC) to make retail payments.

Equity will distribute the NFC-enabled phones free of charge to supermarkets, restaurants, kiosks and barbershops as it seeks to boost income from the payments processing business.

The Nairobi bourse-listed bank is turning to mobile phones as a cheaper and more convenient point of sale (PoS) compared to the traditional swipe card readers.

“Our new MasterCard ATM cards are ‘tap-and-go’ hence the need to put mobile PoS devices with merchants to process payments,” said Equity Bank chief executive James Mwangi (right) when releasing the lender’s first quarter financial results.

“The NFC-enabled phones and cards will help Equity Bank be well positioned to significantly increase volumes and commission from payment processing.”

He reckons mobile phones as PoS terminals offer a cheaper, faster and more secure means of payments compared to traditional devices and customers will not pay to use the service.

Equity has so far issued more than three million high-security chip-and-PIN cards ATM cards to its customers to replace the current magnetic swipe plastics which are prone to fraud.

The bank rakes in an average of Sh40 million monthly in revenue from commissions on payments processing from volumes of about Sh1.8 billion every month.

Equity’s race for a piece of the lucrative retail payments market puts it head-to-head with Safaricom, which has been issuing M-Pesa pay-bill numbers to retailers under the Lipa Na M-Pesa service to facilitate cashless transactions.

Equity and Google in April last year launched BebaPay, an NFC-enabled pre-paid plastic card used to settle matatu fare.

Kenya’s total number of PoS currently stands at 21,647 and the additional mobile devices will increase the number of checkout points by more than ten fold, data from the Central Bank of Kenya shows.

This translates to one PoS per about 2,000 Kenyans — limiting card usage by consumers — hence the decision by Equity to give retailers the devices.

There were 11.4 million payment cards in use by February, with debit cards accounting for 89 per cent of the total or 10.2 million cards.

Payments for goods and services made using ATM, prepaid and credit cards grew by a fifth to gross Sh120.6 billion last year.