Nairobi trial bids to drive contactless payments across Kenya bus services

Kenyan bus service operator Matatu has introduced a contactless payments pilot in Nairobi to help accelerate deployment of cashless fare collection in response to the Covid-19 pandemic.

The eventual goal is to drive contactless payments across the entire Matatu bus service, which is a dominant transport mode across the country, and could see up to 10,000 buses become cashless.

Automated fare collection

The pilot was launched by automated fare collection provider O-City in partnership with transport savings and credit specialist, NikoDigi, and Kenyan payments firm, Tracom.

O-City’s automated fare collection platform leverages the M-Pesa mobile wallet, which is, reportedly, used by 90 per cent of the population in Kenya. Passengers enter a code on their phone and a debit is made on their wallet, which can be instantly seen by drivers to grant access to ride.

The platform removes unnecessary tickets and cash payments, instead offering an accessible payment solution that consumers already use, via a device already in their hand, according to O-City.

“A mobile money revolution has been happening in Kenya with the ubiquity and success of M-Pesa. The move away from cash to contactless public transport is an important part of this movement,” said Tokhir Abdukadyrov, SVP of smart city and transport solutions at BPC.

“By connecting our O-City platform to mobile wallet M-Pesa, we’re able to build a simple contactless fare solution that is familiar to the customer and likely to encourage adoption. Moreover, it enables us to scale fast to rollout the service at a time when cashless payments have a newfound importance.”

O-City’s platform is also built to make fare collection more transparent between the bus owners and drivers. Buses and routes are privately owned by several operators which ‘lease’ to drivers who must meet daily financial fare targets, before generating their own earnings.

With heavily congested routes in Nairobi, digitising fare collection also serves to remove the friction of exchanging money and time taken for drivers to pick up passengers

Fare pricing differs depending on the route and a range of factors, so digitising the transactions enables visibility and reliability of fare data, reports O-City. With heavily congested routes in Nairobi, digitising fare collection also serves to remove the friction of exchanging money and time taken for drivers to pick up passengers.

“Together with our partners, we have designed a product that automates fare collection without taking control away from the drivers and conductors or radically changing how they operate. We dubbed the solution ‘Lipafare’ meaning pay fare,” added Patrick Karera, managing director at Nikodigi.

“The platform has been embraced by passengers because of its ease of use, but also because it eliminates cash transactions during the Covid-19 pandemic."

Adopted by more than 100 cities worldwide, the O-City automated fare collection solution was designed by BPC, a banking and payment firm which claims to have some 280 clients across more than 90 countries.

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