Technology

Transport agency to release rules on PSV cashless travel

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From left: Matatu Owners Association chairman Simon Kimutai, Nairobi senator Mike Mbuvi Sonko and Tigania East MP Mpuri Aburi during the launch of a card for paying commuter fare at the Laico Regency Hotel in Nairobi on May 27. Photo/FILE

The National Transport and Safety Authority (NTSA) is Thursday expected to issue regulatory guidelines on how cashless fare payment systems will be implemented.

The cashless system is expected to take effect next months, a move that has seen a number of public transport operators start installing the needed gadgets.

However, there are a number of concerns, especially from consumers, on issues such as the integration of the cards and the safety of their data and money, which need regulations to be put in place before the system is rolled out.

Lack of an integrated system will mean that commuters will be forced to invest in multiple cards to travel from one end of the city to another or from one county to another.

The NTSA told Business Daily in an interview that according to regulations, the systems from the different vendors will have to be integrated.

The vendors will also have to register with the Central Bank of Kenya to safe guard the money deposited in their systems.

NTSA chairman Lee Kinyanjui has ruled out the extension of the deadline, saying the regulations on how the service will be implemented will be gazetted this Friday.

“The deadline will not change. We expect the standards to be in the gazette notice this week which will spell out the concerns raised such as interconnectivity of the systems and safety of the money, among other things,” Mr Kinyanjui said.

Some public transport operators such as the Kenya Bus Service (KBS) had previously raised concern that lack of regulations would slow down the uptake of the service especially in the remote parts of the country.

KBS is now asking the government to implement the rollout of the new system in phases, beginning with Nairobi.

“The cashless payment system is a good idea and we are very supportive of it. However, I don’t think it is something that was well thought out in Kenya,” said Edwin Mukabanah, the managing director of KBS.

“It is just weeks before the deadline and up to now, there are no standards to guide the operators on how this should be implemented. This has left room for each operator or matatu owner to invest in their own system which may not be interlinked with the others.”

This, he added, will pose challenges to consumers who will have to invest in multiple cards.

He also noted that currently there is no mechanism to refund passengers in the event a vehicle is impounded by traffic police officers or suffers mechanical breakdown.

“What happens if a commuter enters a matatu and says he can only pay in cash? You cannot arrest such a person and say he has refused to pay because cash is recognised as a legal tender.”

READ: Matatu association takes on Google, Safaricom with cashless fare service

An integrated systems provider, PesaPrint Ltd, which is eyeing the multi-billion sector, said the regulations will help guide most of the service providers.

“We have already achieved interoperability and have started working with a number of public service vehicles such as Double M. We are waiting to see the regulations that will further guide us on the wayforward,” David Ruiyi, a co-founder of PesaPrint Ltd, told Business Daily in a phone interview.

Unlike other firms that have already launched their cashless products, PesaPrint can use multiple cards, including its own Metro Card, or those of its rivals which operate using a novel technology called Near Field Communication.

PesaPrint’s cashless system also enables it to accept mobile money payment services such as Safaricom’s Lipa na M-Pesa service, Master Card’s PayPass and Visa’s PayWave.

A number of firms, including Safaricom, Google in partnership with Equity (Beba Pay) and a Hong Kong firm, TapToPay, that has partnered with KBS to pilot a pre-paid plastic called Abiria Card, have introduced cashless payment ahead of the planned government ban on cash transactions in public service vehicles from next month.

Visa is also reported to be eying a piece of the Sh205 billion public transport industry with a product that is yet to be introduced into the market.

These providers, however, have not signed up with all public vehicles in the city, a failure that NTSA says may inconvenience commuters by forcing them to invest in multiple cards.

The transport agency formed a committee comprising service providers and transport stakeholders to come up with an integrated cashless payment system.

Currently, a commuter who has invested in Google’s BebaPay who travels on a Kenya Bus will be forced to buy both the BebaPay and the Abiria Card.

BebaPay, launched in April last year, has so far signed up about 650 buses and matatus. Safaricom says it has assigned an M-Pesa paybill numbers to about 2,500 matatu operators under the Lipa Na M-Pesa service.

Global payments processing firms Visa and MasterCard have also announced plans to roll out similar cards, highlighting the increased interest in digitising the chaotic matatu industry.

These firms stand to rake in at least Sh2.05 billion annually in revenue by processing fare payments for PSV operators for a one per cent commission fee.

The introduction of cashless payment is part of a wider strategy by the government to streamline the chaotic matatu industry.

The system, among other things, is meant to curb erratic increases of fares brought on by unfavourable weather and heavy traffic. It will also enable the Kenya Revenue Authority to collect taxes from the industry.

Bus and matatu owners are also expected to easily track their vehicles’ daily earnings using an online platform thus making it harder for their crews to steal from the day’s earnings.

The largely untaxed multi-billion public transport industry has more than 22,000 licensed PSV operators, according to the Traffic Licensing Board.