Safaricom reveals interest in cashless fare firm

Safaricom has revealed that it has a commercial interest in the cashless fare payment card dubbed My 1963, which puts the telco among the biggest beneficiaries of the new system expected to start operating Monday.

My 1963 card was launched about a month ago in a high-profile ceremony presided over by President Uhuru Kenyatta and Safaricom CEO Bob Collymore, generating speculation on the ownership of the card which also appeared to have the backing of matatu (public service vehicle) owners.

Most of the other matatu cashless fare payment options also rely on mobile money top-ups, again providing a major revenue earning opportunity for Safaricom.

“My 1963 is a partnership between Safaricom and Fibre Space (a Nairobi-based IT firm),” said the chief officer in charge of new products at Safaricom Betty Mwangi-Thuo in an interview last Friday.

Kenya’s lucrative PSV industry grossed Sh218.1 billion revenue last year, whetting the appetite of banks and mobile money firms who stand to rake in a minimum of Sh2.1 billion annually in commissions, assuming a processing fee of one per cent.

Safaricom said it has a “partnership” interest in My 1963 travel card with Mwakio Ngale, a Nairobi-based techie through his IT firm Fibre Space Ltd.

The Nairobi Securities Exchange-listed telco however said Matatu Owners Association (MOA) has no stake in the venture, contrary to earlier speculation.

It has branded the My 1963 card “a product of Safaricom |M-Pesa.”

The National Transport Safety Authority (NTSA) set Monday’s deadline for a ban on cash fare payments in Kenya’s public service vehicles as part of a plan by the government to formalise the matatu sector.

READ: Commuters stare at chaos in shift to cashless fare drive

Safaricom has ring-fenced the My 1963 card to have it exclusively recharged via M-Pesa unlike other cards that can also be topped up using other mobile cash service providers.

Other cashless payment service platforms include BebaPay (run by Equity and Google), Abiria (Kenya Bus Service), Pepea (KCB), Tangaza Pesa PSV card and Co-op Bank’s M-Nauli.

Safaricom is pursuing a multi-pronged approach to cash in from the cash-lite matatu policy by rolling out its own commuter card and also assigning M-Pesa paybill numbers to matatu operators.

The service is called Lipa Fare na M-Pesa where travellers do not incur any transaction charges and matatu owners pay a one per cent commission based on the value of total fares collected via the mobile platform.

Safaricom’s entry into bus fare payments steps up the firm’s efforts to increase mass usage of M-Pesa having already launched payment schemes such as Lipa Kodi for rent, Lipa Karo for schools fees and Lipa Na M-Pesa for retail merchants.

My 1963, just like its rival commuter cards, comes with contactless payment technology known as Near Field Communication (NFC) where commuters will use a mobile phone or point of sale to pay their fares.

Holders of commuter cards such as BebaPay, Abiria, Pepea, Tangaza Pesa PSV, My 1963 and M-Nauli will tap them on any mobile point-of-sale (mPOS) terminals which will generate mini-receipts.

The government was forced to push back regulations that will outlaw the use of cash for bus fare payments to today from the earlier date of July after matatu operators asked for more time to comply.

This was after the Central Bank of Kenya (CBK) and the NTSA set out fresh regulations requiring all commuter cards issued by rival players to be inter-operable to allow customers to use them across all networks.

NTSA also requires providers of cashless matatu payment systems to seek clearance from CBK as a strategy to ensure commuters’ deposits are protected.

A digital fare collection system will help curb employee fraud by matatu crew as owners can track payments in real time and the money collected in a bank account, making it easier to access loans.