Exclusive: ‘All aboard for contactless payments!’ – Newraj Burton, BPC in “The Paytech Magazine”
Climbing onto a matatu in Kenya was already quite an experience – but now it’s also a digital one. Newraj Burton, Business Development Director for banking and payment technology company BPC, takes us on a contactless payments journey
It’s estimated that 70 per cent of Kenya’s 52 million people ride the matatus – the famously loud, crazy-colourful buses that rock around the country, connecting communities and keeping thousands, if not tens of thousands of people, in work. Each one a unique, Banksy-style artwork on wheels, matatus pulse to the beat of high-volume onboard sound systems as they compete above the noise of city traffic for attention and fares.
The buses and routes are privately owned by operators who ‘lease’ them to individual drivers who must meet daily financial targets, before generating their own earnings from passenger takings. Until recently, those fares were paid in cash. But in the capital of Nairobi, global banking and payment technology company BPC, in partnership with transport savings and credit specialists, NikoDigi, and Kenyan payments firm, Tracom, is taking passengers and drivers on a digital transaction journey.
The destination is invisible payments, made possible by O-City, a contactless ticketing solution that leverages the simplicity and security of mobile money and other wallets. Based on its experience of working across public and private sectors in other parts of the world, BPC is solving a very specific, local problem – one that’s another step towards a cashless Africa and is tailor-made for a post-COVID world.
BPC business development director, Newraj Burton, explains: “We were already working on the project in Nairobi but the pandemic certainly accelerated what we could offer, and when. “We knew there were many people using these buses, but paying with cash has a lot of insecurity in this pandemic environment. Money being passed hand-to-hand has safety and hygiene implications, for sure. That’s why, after a great deal of research looking into the business needs, how people behave and the country’s desire for innovation, we were able to deliver a service that is fully-functional and suited to the new requirements.”
Kenya was primed for such a product.
The country has been a forerunner in terms of cashless payments. Historically, it encouraged the widespread use of Visa and Mastercard when neighbouring countries were still only operating skeleton bank services. Then, in 2007, came M-Pesa – a mobile phone-based money transfer service that transformed the economy. Empowered by M-Pesa, the share of the population with access to financial services went from 14 per cent in 2006, to more than 80 per cent today. By the end of 2019, the total volume of mobile transactions was said to equate to almost half of the country’s total gross domestic product.
Then, in March of last year, the Central Bank of Kenya (CBK) introduced emergency measures to remove transaction fees and increase the use of mobile money in place of cash. As a result, the monthly volume of person-to-person transactions increased by 87 per cent between February and October, 2020. All of that created a fertile environment for the launch of O-City contactless ticketing, which utilises M-Pesa (adopted by 90 per cent of Kenyans), among other payment services. Passengers simply enter a code on their phone and a debit is made from their M-Pesa wallet, which can instantly be seen by drivers to grant access to their buses.
“O-City has brought a revolution in the way payment is effected in the Kenyan transport industry,” says Burton. “We now have more than 2,500 drivers connected to the platform, and the number is increasing day by day. What we are doing is very much in step with the digitisation process of the Kenyan government. They are busy ensuring banking, payments, insurance, even the social benefit programme, are onboarded on e services and e-platforms. Put simply, their priorities fit ours.”
Less cash means better personal security as hard money invites crime. But, digging a little deeper into the Nairobi model, the value of O-City is bigger than simply offering safety and convenience for the ones riding the routes. The nature of the licensed operating model on which the matatu network runs, means reporting is also a vital part of O-City’s offering.
“Transparency is key for stakeholders, and O-City gives more visibility to fare collection,” says Burton. “The business relationship between the matatu owners and their drivers and conductors is now better co ordinated. Fraud has been drastically reduced as cash-free, frictionless environments, bring more transparency. It’s a lean way of collecting money because the debit and credit are processed automatically. And those leasing the vehicles for a fixed monthly amount can evolve in a win-win partnership – all while bringing quality and more timely services to the commuter.”
Kenya’s National Transport Safety Authority has embraced O-City, because – well, because it works. But another benefit specific to the global pandemic also comes from the data being gathered.
“The authority wants to bring forward contact tracing,” says Burton. “It’s very important for them to understand the mobility of commuters. Because there were some restrictions around coming into Nairobi city at a specific time, it was essential to know who was not following the regulations. Our platform was able to provide that kind of reporting.”
A huge part of O-City’s bedding-in has come from a strong marketing and educational push. The pilot programme came with a campaign to get the bus owners and drivers to become champions for the service (which takes 10 minutes to enrol in). In addition, field agents have been recruited to get on the buses, to ensure that the system is being adopted and to assist with any issues that arise. Burton adds: “It’s good to have communication through press and social media but, in certain places, it is vital to have a physical contact, and a physical explanation. Our field agents do that job for us very well. The simplicity of what we provide is key. It’s a clear message, a clear offering, where everyone involved – vehicle owners, drivers, conductors, passengers and local authorities – stand to benefit.”
OILING THE DIGITAL WHEELS
Worldwide, O-City has been adopted by more than 130 cities and boasts in excess of 130 million transactions per month. With the platform now going great guns in Kenya, what next? Clearly, cashless transactions are here to stay, but surely a one-size-fits-all approach won’t necessarily work across the continent? There are inevitable infrastructure requirements, poverty, cost implications and the necessity for governments to be keen advocates – all issues that need to be addressed before scaling up the operation in Africa.
But, according to Burton, the high penetration of mobile phones here, the COVID crisis and good old-fashioned customer need means there are already plans to broaden the model to other countries in the region. “At the moment, we are putting a lot of emphasis on this project [in Nairobi], but we do expect to expand within the African continent. Our strategic partner is already operating in several countries,” he says.
“Even in Kenya, we are not only focussing on buses and matatu. We are thinking of bringing this service to taxis, luxury coaches and intercity services. “The O-City platform enables high interoperability with different payment channels, and different means of transportation. The future is about integration, about interoperability and about bringing convenience to public citizens. Of course, there will always be cash – in rural areas with no access to mobile phones, for example – but frictionless transactions give us so many possibilities.”