Family Bank has applied for the Central Bank of Kenya’s approval to issue cards for making cashless payments in public service vehicles (PSVs).
Mobile money company, Tangaza Pesa, also said Wednesday it had received a “no objection” letter from the Central Bank allowing it to sell the service for paying bus tickets using pre-loaded cards.
Family Bank, classified by CBK as a mid-tier lender, said it plans to launch its own plastic card ahead of the government’s revised December deadline for a ban on cash transactions in matatus.
The bank has submitted an application to the two regulators, CBK and the National Transport and Safety Authority (NTSA), to introduce commuter cards that would see travellers tap on a smart phone or point of sale terminal to pay fare.
“We want to ensure that as a bank we fully comply with the regulations set by NTSA and CBK to facilitate our effective participation and provision of the cashless fare services,” said Family Bank in a statement.
Tangaza Pesa becomes the fourth licensed provider of the ‘cash-lite’ solution. The PSV card will see commuters pay fare by tapping the card on a mobile phone or mobile point-of-sale terminals and get receipts.
“We will roll out the product to the public through our agents and partnerships with commuter saccos and bus companies,” said Oscar Ikinu, chief executive of Tangaza Pesa.
Family Bank said it would introduce in Kenya contactless payment cards dubbed Visa payWave where users wave the card in front of a reader or point-of-sale to complete a transaction.
CBK and NTSA last week authorised Equity, KCB and Co-op to handle matatu fare payments as a strategy to ensure commuters’ deposits are protected.
The banks and mobile money providers are eyeing income in the form of commissions from Kenya’s lucrative matatu industry, which grossed Sh218.1 billion revenue last year.
The lenders are also looking to mobilise cheap deposits from fare collections.
The government has pushed back regulations that will outlaw the use of cash for bus fare payments to December from the earlier date of July after matatu operators asked for more time to comply.
This has whetted the appetite of lenders and mobile money providers who stand to rake in at least Sh2.1 billion annually in revenue by processing fare payments for PSV operators calculated at a flat commission rate of one per cent.