Equity Bank has partnered with global IT giant Google to introduce a cashless commuter fare payment system that involves the use of pre-paid plastic cards to settle public transport bills.
The partnership marks Google’s first introduction in Kenya of its Near Field Communication (NFC) technology, which it has been promoting in some developed economies.
Equity Bank said during the launch on Tuesday it is targeting the more than 1.5 million Nairobi residents who use public transport daily.
“This system will help eliminate the cost and risk of handling cash.
“It will also help formalisation of the transport sector because as banks, we can now fund this sector without fear since we will have the financial status statements of the industry players at hand,” said Equity Bank CEO James Mwangi.
The card-based system dubbed BebaPay is based on Google’s NFC technology, which runs on the Android mobile phone operating system.
Users will swipe pre-paid cards against android-based smart phones that will be given to public transport customer attendants.
The cards, Mr Mwangi said, will be available free of charge at Equity Bank service agents, where they can also be loaded with money. The cards can also be reloaded with cash through the bank’s mobile banking platform, without incurring additional cost, or through M-Pesa Paybill.
The public transport sector is a key economic driver whose growth could power the economy, but has been held back by the disorderly nature of the industry.
Mr Mwangi added that once the system is tested in Nairobi, it will be spread to other towns, although he did not give a timeframe.
Matatu owners will be able to access the money paid by commuters immediately, and can access records of their bank accounts in real time through a system interface, allowing them to track the inflows from their vehicles.
The public service vehicle operators will be required to have the BebaPay application on smart phones in order to accept payment from commuters. Commuters on their part will receive free SMS receipts once they make payments.
Google Kenya country manager Joe Mucheru said the system will work online and offline.
“The only way to get money out of the card is through buying the service, plus we can track the card whenever it is used. If it is lost, you contact us through an SMS and we block usage of the card,” said Mr Mucheru.
This is the second cashless payment system that Equity Bank has launched this year. In January, the bank partnered with MasterCard to introduce a cashless payment system at retail centres also based on the swipe technology.
It uses similar technology to that of the commuter card, only that the transaction is done by placing mobile phones or ATM cards compliant with the more secure global standard Europay-MasterCard-Visa (EMV) in close proximity to a point-of-sale terminal.
The MasterCard payment system referred to as Paypass is present in 48 countries and accepted at nearly 550,000 merchant locations.
Matatu Owners Association chairman Simon Kimutai said the system would help investors in the industry to control their cash flows and reduce losses that they incur from theft by matatu crews.
Mr Kimutai, however, warned that there may be attempts to sabotage the system given that it threatens to cut off the people who corruptly benefit from the sector without necessarily investing in it.
Criminal cartels and corrupt traffic officers have been cited as the biggest beneficiaries of the exploitation culture prevalent in Kenya’s public transport industry.
Mr Kimutai asked the government to bring in legislation outlawing cash payment for transport services once there is wide acceptance and usage of the cashless payment system.