A woman shopping online using her credit card. The scepticism about credit card and mobile money use is largely among the middle and lower class income shoppers. FOTOSEARCH
Hard cash remains the market’s leading means of payment at the retail level despite the surge in plastic card and mobile payment transactions, according to the Reja consumer report by Consumer Insight.
The report notes that despite new technologies in retail payment, Kenyans have remained faithful to traditional payment systems with 90 per cent of the population opting to use cash for daily transactions instead of debit or credit cards. Mobile money shared the remaining percentage with card transactions.
Those with disposable income are among the few consumers who made up for the numbers of Kenyans using credit and debit cards to pay for goods and services. A fifth of Kenya’s affluent use plastic cards and alternative to cash.
The skepticism on card and mobile money use, the report says, is largely among the middle and lower class income shoppers. “Here we see available options ignored in favour of cash,” states the survey. This is further complicated by merchants who refuse non-cash payments.
“Ultimately, the low acceptability by merchants of non-cash payments makes it cumbersome to insist on alternatives, and creates a preference of coins and notes - centuries old technologies in a modern African economy,” says the report.
Indeed, merchants are the first point of discouragement for consumers who are willing to embrace alternative payment methods. This means if retailers were keen in adopting technology in transactions, they would not only ease their workload and the pressure of finding change but also seal avenues for loss of cash.
Alternative payment systems shield consumers from physical loss of money especially where it is risky to carry cash. It also reduces the chances of fake currency distribution.
On the other hand, automated payment systems reduce corruption and revenue leakage in government institutions thereby fostering accountability.
According to data from Central Bank of Kenya on retail transactions, the number of credit and debit cards stood at 138,011 and 9,063,905 as at December 2012 respectively up from 122, 212 credits cards and 8,548, 390 debit cards during the same period the previous year.
Mobile transactions rose from Sh41.7 million in December 2011 to Sh55.96 million in the same period last year.
However, despite the steady growth in card and mobile money transactions in the last three years, it seems technology has done little to change Kenyans’ mind set on use of cash. The common reason attributed to this is card fraud. Most customers have shunned cards for fear of falling prey to criminals.
A research by MasterCard Advisors commissioned by the CBK revealed card usage at point of sales (PoS) in the country was way below the world average. Many people felt it was too expensive to transact using cards.
The issue of how secure it was to use them without people getting your details and using them fraudulently was also blamed for this outcome. These were confirmed to some extent at the end of last year when some banks fell prey to ATM fraudsters.
But financial institutions have come up with water tight systems to assure consumers of safety. Euro Pay, MasterCard and Visa (EMV) card standards is the current security technology adopted by banks.
It’s expected that Kenyans banks will have complied fully in two years.
Equity Bank and MasterCard have joined Google to increase the adoption of non-cash transactions. Equity’s partnership with MasterCard last month launched a payment mode called PayPass for small point of sale (POS) transactions.
To make this kind of transaction, one is required to pass their phone close to a pay point machine or another active phone facilitating money transfer from one account to another.
The system works on phones fitted with a micro-chip which allows for this. The technology stands to pick up given that one per cent of Kenyans are using loyalty cards to shop.
