When Uber landed in Nairobi – one of the World’s most dynamic cities, – they realized their card payment system was not popular. This led to Nairobi becoming the second city in the world where Uber introduced cash payment option, after Hyderabad. The single move tripled Uber’s growth in Nairobi in just two months.
A year earlier, the Kenyan government had tried to force a cashless fare system in the public service vehicles, through legislation. This was in an attempt to bring order in the industry, although the bigger motivation was the taxes that could be netted if the 2 billion USD industry became more transparent. The idea brought in big guns like Google and MasterCard, in partnership with local firms such as Safaricom, KCB and Equity Bank. The initiative flopped dismally.
What is the problem with cashless payment in a country that leads the world when it comes to mobile payments and a city that is known to be good in adopting innovations?
The cashless transport initiative was designed to solve a problem that only existed to some people, not all stake holders. The government was interested in taxes. The public service owners were interested in creating a form of accountability from their employees (drivers and turnboys). The tech companies were interested in earning some revenues. The civil societies wanted to eliminate bribery that is given in form of cash. But there were three main stakeholders who might have nothing to gain; public service vehicle operators, traffic laws enforcers, and the passengers.
The public service vehicle operators are paid by the vehicle owners, but also pay themselves from the money they collect. This motivates them to work harder, break rules, and even carry excess passengers. The fact that the owner cannot tell how much money they collect makes it easy for them to withhold some money. Introducing a cashless system would work against them.
For the traffic police, their main work on the roads is to collect bribes. Getting cash out of the way means that they have nothing to eat. As the people who were supposed to oversee the enforcement of these laws, they had too much to lose if the project was successful
The third stakeholder were the passengers. First, this was not a major problem being solved, because majority of them were okay paying in cash. In any case, only short distance public vehicles require you to pay during the journey. Majority of the long distance vehicles require one to pay in advance while booking. In any case, using a card meant having an extra tool to carry or forget, and a need to monitor the balance. It would take a lot of effort to change the culture and instill a habit of cashless payment.
With that, the project collapsed.
There is still hope that one day Kenya will implement a cashless transport system. Rwanda is successfully doing this, and this can be a place to benchmark.
One place that can be used to pilot and run the system is in the proposed BRT transport. The passengers will be motivated enough to use the cashless system because they will be benefiting from a faster means of transport. Once successful, it will be possible to implement the system elsewhere.
To deal with public service operators, a different mode of remuneration can be implemented, where a commission based salary is implemented. This would reduce the need for secrecy in the earnings, and make them more open to accepting a cashless system.