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iHub By Angela Okune / June 9, 2014

Cashless public transport payment systems – What are our options?


By: Angela Okune, Tabish Bachani, & Wambui Wairua

Imagine you have arrived at Dagoretti corner matatu stage when suddenly, swoosh!, a thug swipes your phone out of your hand! Luckily, he didn’t get your wallet and you still have some cash so you board the next matatu bound for the nearest police station to report the theft. “Here’s my 20 bob,” you try to hand the conductor your coin but he shakes his head vigorously. “Hapana, hatuchukui cash, bebapay tu (no, we don’t take cash, only a bebapay card).” You don’t have a bebapay card, but you do have a new Visa card. So you hand that to the conductor who shakes his head again. “Hapana, sisi hatuna machine ya Visa. Bebapay tu! (We don’t have a machine for Visa, you can only use bebapay.)”

Have you heard of the National Transport & Safety Authority Act Legal Notice 23 of 2014? It created regulations due to be implemented by all public service vehicles (PSVs) including matatus, buses, and taxis. The regulations instruct operators of PSVs that they must operate a cashless fare system as from the 1st of July 2014. The Regulations were subsequently revoked and replaced by those created by Legal Notice 23 of 2014 but these still contain the rule on operating cashless payment systems. Essentially,  this means that it shall be illegal to operate PSVs after that date without a cashless system. Operators or drivers of PSVs in default risk being subjected to a fine of Kshs. 50,000, imprisonment for one year, or both. In addition, the Authority has wide powers to cancel operator and drivers licences for violations of this and other regulations passed by that legal notice.

We are curious about the current cashless systems available to PSVs and their viability if the regulations are to be implemented as they are. As iHub, we see the proposed cashless system as presenting great potential opportunities, especially around increased transparency in the transport sector. But we also see potential risks at hurriedly implementing a system without studying the broader impacts of such swift changes to the transport sector. Therefore, we hope to facilitate a growing dialogue around the latest legal notice to affect Kenyan technology users.

So we have this legal notice. What options for cashless payments exist anyway?

Current cashless payment options include the following:

mPesa (Safaricom)

Most commonly implemented via the M-Pesa Safaricom service in phones, the transaction is sent to Paybill with the business number and amount to be credited to the respective recipient’s account. Matatu owners pay Safaricom 1% commission on total transactions paid through m-pesa. The product works offline, and transactions can be accessed anytime electronically. Disadvantages include that Safaricom’s control of SIM cards locks out other mobile service users (e.g. what do you do if you only have an Airtel line?); there is a minimal transaction fee incurred, and payment charges may be high for small transactions. (Source)

bebapay (Equity Bank + Google)

Bebapay is a free top-up card gotten from Equity Banks, BebaPay agents and Tellers. Topping up and making payments are free services, unless using mobile money providers. However, an initial deposit of Ksh.250 is required to use the card, and the card/account can hold up to Ksh.10,000 credit. The product works offline – tap and go, and balance check, notifications of top-up or usage received by SMS. Transactions/real time sales can be monitored/tracked electronically by SMS or online by matatu owners, and this aids in decision-making, e.g. on which route to invest buses.

BebaPay service is integrated in phones (NFC-enabled), independent of telecoms; however, unavailability or loss of phone would mean no BebaPay transaction. To curb that, NTSA is looking at having a fixed POS (points-of-sale) in buses where passengers can tap. Also, loss of card would mean contacting Equity and its agents to block your account, which takes up to 24 hrs to register in the system. (Source 1; Source 2; Source 3).

Visa (Equity Bank)

With Visa, one taps their Visa card on a mobile phone or gadget to make payment, instead of swiping the plastic card. This requires a shift from magnetic card strips to chip-based versions for high security to curb fraud. May incur transaction charges. (Source).


A registered PesaPal businessman/matatu owner first creates an entry point for payments, i.e. website with integrated PesaPal, an invoice issued from the owner’s PesaPal account, or listing on PesaPal’s bill payments. A buyer pays using mobile money, credit card or PesaPal wallet. For offline transactions, a unique PesaPal reference is required. Payment is received in a trust account which is transferred to the recipient’s account upon a withdrawal request. Receipt of transaction notifications and summary, and payment status via SMS or online. This option is more online-focused, think e-commerce. (Source).


Money is loaded into Mobikash account at an agent outlet, or linked bank account from the mobile phone, and sent from Mobikash mobile account by selecting source and destination account and sending to the selected number. Similar to m-pesa, however, in this case, money can be sent to and from any mobile phone subscriber and linked bank accounts. Bills can be paid directly from Mobikash or any of the linked bank accounts, without the intervention of an agent. Mostly mobile phone accessed, even bank accounts, and transactions can be managed on the phone. (Source).


MY 1963 card has been rolled out recently by the Matatu Owners Association in conjunction with the Matatu Welfare Association. The MY 1963 pre-paid card is developed and operated by Fabre space Limited on a point of sale [POS] terminal installed in My 1963 compliant buses and matatus.

AbiriaCard (KCB + Mastercard + KBS)

Abiria card has been rolled out by Kenya Commercial Bank, MasterCard and Kenya Bus Services. The card uses near field technology (NFC), where commuters pay fare by tapping onto a receiver gadget owned by the bus company. Commuters have to pre-load their fare in order to pay for public passenger transport (buses, taxis, ferries, trains, road toll and parking). To acquire an Abiria card, you must go to sales or reloading stations and present your identification to register and receive a card. You must pay a refundable deposit of Kshs. 50. According to the Abiria card website, sales/reloading stations are currently at:

o Kencom Bus stop
o Ambassador Hotel bus stop
o General Post Office (GPO)
o Community
o Kenyatta National Hospital
o Central Bus Station
o Kibera
o Utawalla
o Kawangware

Abiria Card is powered by TapToPay Ltd (a subsidiary of Advanced Card Systems (ACS) based  in Hong Kong). Pilot Routes that currently support Abiria Card are:

o City Centre – Community – Ngong Road – Kibera and Back
o City Centre – Community – Kenyatta National Hospital and Back
o City Centre – Mombasa Road – Utawalla and Back
o City Centre – Yaya – Kawangware and Back


Cashless vs Cash

Proponents believe that cashless is a more organized structure of payment. Generally, fare is standard, does not fluctuate upon seasons and peak hours, e.g. rains or traffic. Since no loose cash is involved, there is no risk of unpaid loose change either. Since most cashless forms are electronically friendly, transactions can be monitored. For matatu owners, this enables tracking of sales and aids in decision-making. Also, when it comes to taxes, matatu owners have had to pay taxes beforehand to the Government, but with Cashless, revenue earned is represented through statements/bank accounts, and they can remit taxes to KRA accordingly.

On the other hand, matatu operators – drivers and conductors, are reluctant to accept cashless on the grounds that they will not have loose cash on hand for emergencies such as immediate vehicle repairs, refunding transferring passengers to other matatus, cartels on some routes who need their cuts, bribing police, etc. Also, using a cashless system denies them the extra cash at the end of the day, a share of the day’s proceeds. Overall, passengers may have to pay/end up paying more due to transaction charges incurred in some cashless forms. There will also be costs involved in setting up the initial tech infrastructure and such costs may end up being passed down to the public transport users.

There are several pending questions which we are still hoping to answer in the coming days with input from various stakeholders such as NTSA and private implementing companies. For example, once public transport vehicles all move to cashless systems, do the matatu associations choose which system they will use or do all of them choose the same one? Will the cashless systems be nationwide or only in Nairobi?

All of the options stated above still have areas of further improvement with none of the options yet proving to be a clear front-runner in cashless public service vehicle payments. Issues that should be discussed especially center on accessibility and inclusivity for all public transport users, data protection and security, and technology infrastructure.

What do you think are additional possible pitfalls and potential opportunities of a cashless PSV payment system? We look forward to reading your thoughts in the comments section below.

Photo Credit: Leonida Mutuku

Abiria Card machine on a KBS bus route. Photo Credit: Leonida Mutuku



1) This post was edited to clarify that Legal Notice No, 219 of 2013 was revoked by Legal Notice 23 of 2014.

2) Abiria card was added to the list of possible options.

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Author : Angela Okune

Angela is Research Lead at iHub. She is keen on growing knowledge on the uptake and utility of ICTs in East Africa. She is also co-lead of Waza Experience, an iHub community initiative aimed at prompting under-privileged children to explore innovation and entrepreneurship concepts grounded in real-world experience.

  • Wambugu Kanyi at 12:18:46PM Monday, June 9, 2014

    hi !
    thanks for the well researched article. some clarifications/corrections need to be made.
    the gazette notice 219 of 2013 was revoked by the cabinet secretary and a new one gazetted ( I think its 23 of 2014) . this one was also challenged in court and was declared illegal . as of now the state is implementing illegal policies . this is a subject that is before the courts right currently.
    the major challenges that we have not been told about are as you have mentioned on the article . this include what is the backup plan in case of system failed (both at pos or servers). commuters will need to subscribe to all the service providers as they are not interconnected(they use deferent platforms).

  • Angela Okune at 12:24:08PM Monday, June 9, 2014

    Thank you very much Wambugu for the clarification and your input.

  • Angela Okune at 12:25:15PM Monday, June 9, 2014

    Also, do you have any links that you can point us to regarding the new gazetted notice and the current court case?


  • Topher Kanyuga at 12:51:54PM Monday, June 9, 2014

    The first paragraph highlighted what in my opinion is the biggest problem. Passengers will be forced to either a) wait for the matatu/bus for which you have a card or b) carry different cards around. This is a likely situation for the good number of people who use 2 or more matatus daily. Also God forbid you lose/forget your wallet one day.

    As for opportunities, we could see a sort of fare exchange system soon. Sambaza fare?

  • Kenyan Mathree at 13:22:31PM Monday, June 9, 2014

    By far the most informative article I’ve read, thank you. Worried about situations like running out of charge while commuting, and my privacy – I certainly do not want my contact details available to all route conductors.

  • Wambui Wairua at 13:44:01PM Monday, June 9, 2014

    Wambugu is right. Legal Notice 23 of 2014 did revoke 219 0f 2013. The legal Notice can be found here:

  • Wambugu Kanyi at 15:00:44PM Monday, June 9, 2014

    thanks Wambui for the link. I only have a tattered hard copy of the new notice. am not sure the outcome of the case but I know the CS was summoned for contempt of court coz some vehicles were arrested yet court had declared notice illegal. all I recall is that one of the lawyers was Mr. Harrison Kinyanjui and 16th of may was a judgment day for one of the cases.
    uptake of the system is low ,both by operates and commuters. one of the routes that I regularly use has 4 vehicles subscribed & they seldom have the phones .

  • Muthuri Kinyamu at 15:14:41PM Monday, June 9, 2014

    What happens if you board a Cashless PSV without a card/ with insufficient funds on either of the options listed? Will they accept cash? If yes then that’s a big loophole that the Matatu crew and commuters will exploit to transact in cash.

    What’s the value proposition to commuters? Is it so compelling to encourage uptake? I don’t think so. Add the fact that this tech will not solve moral issues in transport like stealing or overcharging ~ just like Mpesa ~ guys can pay bribes, gamble, ransom or do bad things . I think we should have a an option to pay cash or use either of the options available.

  • Jeffrey Aligula at 15:54:01PM Monday, June 9, 2014

    I would like to say this, the idea of having a cashless system is a novel one and needs to be looked into. We cant deny its benefits and the fact that it is common in so many developed countries. My greatest fear is that we might be going about this all wrong. We are trying to implement systems whereas we haven’t solved the fundamental problem. Our biggest problem is that we don’t have a structured or systematic transport/transit system. Case in point what Malaysia and Singapore have done. When you centralise the transit system its easy to implement the cashless system. You can have your POS at this centralised location.
    At this point what we have is that all Matatus have to move around with a handheld NFC reader, this is just to inefficient of a system. My advice lets first work on centralising the transit system, then think of having a cashless system, otherwise this will just be another exercise that would go wrong

    Aligula GK -IEng (UK)
    New Product/Process Development Engineer

  • Chris Orwa at 16:40:26PM Monday, June 9, 2014

    A better system would be to link all cards to a central service (maintained by a neutral player) and transactions can be go across cards. Like calling Safaricom from Airtel or using a Visa branded card on any bank branch. This way all cards would be interoperable and perhaps with a small fee for cross-card charges.

  • Nanjira Sambuli at 17:06:13PM Monday, June 9, 2014

    Couldn’t agree more, Aligula.

    What’s surprising is that while policy recommendations around making the transport system more effective in Nairobi, none of it has been implemented. I did some policy research some time back, and what the good folk at KIPPRA said is that tech is not the solution to our mobility problems. More at

  • Wambugu Kanyi at 08:35:20AM Tuesday, June 10, 2014

    true there Orwa .
    the best solution to the problem of many players is to have a system that is interoperable. mobile phone and banking systems are perfect examples. the players know this and that’s why they are struggling to get a big chunk of the pie (both merchants and commuters). this will give them a better negotiating position on the system to be adopted. many will be swallowed by the big players(as is the case in the mobile phone industry & TV signals)
    @nanjira . successive governments invest a lot of time and money in research & policy development and very little on the actual implementation of this policies. every minister /government comes with their own style of solving the problems thus leaving the area in more chaos.

  • Kevin Muhinga at 08:57:45AM Tuesday, June 10, 2014

    You have highlighted the advantage of cashless system only serves the vehicle owner. Passengers will be burdened with acquiring several cards if they interconnect along routes with separate payment system providers.
    Passengers are protected in the consumer rights laws. For instance I have the freedom and right to choice. I can choose whether to board a Citihoppa bus or KBS. Consequently I have a right to choose how I pay. It could be by cash or cashless. Cashless can be cards or mobile money transfer.
    Have the matatu owners and operators done sufficient feasibility studies to test success rate? Do they have adequate alternative plans in case cashless system fails? Are they just implementing policies just for the sake of it? Or are they still on the craze of digital government?

  • Wambugu Kanyi at 15:56:54PM Friday, June 13, 2014

    you can follow transport ministry @transportKE to get more info on this issue. there was a stakeholders meeting and more information on this issue was released. hope to hear more as we approach the deadline.

  • Angela Okune at 00:06:37AM Saturday, June 14, 2014

    Thanks Wambugu. We are working on our next blog around this and hope to have more insights based on the information released and other info sources. Would be great to hear any additional leads from you as you hear about them as well. Thanks!

  • Nelson Simfukwe at 10:09:00AM Monday, June 16, 2014

    It is a great idea! Here in Tanzania, we pay daladala(matatu) fare through tigopesa. Mobile banking is becoming popular and very useful.

  • Ken at 10:38:48AM Monday, June 16, 2014

    You forgot Kenya startup NdovuCard. Their bar code system works with just an android phone with a wireless bar code scanner. It’s the fastest.

  • Roger Gichuhi at 10:44:01AM Monday, June 16, 2014

    Thanks for the insightful article on the progress of the cashless implementation in Kenya. On the issue of what happens if you loose your wallet/phone/card but have cash, it’s not uncommon even in other developed markets for a user to ask someone else to pay for them with their card in exchange for cash. Short measure but it works, and it’s not likely you’ll be robbed more than 3 times in a year.

    As earlier noted the big hurdle is making the systems interoperable.

  • Omingo Obiko at 11:26:14AM Monday, June 16, 2014

    The elephant in the room, however, is that majority of the targeted consumers will not buy into the idea if there is no cash-out option. They simply can not afford it! You and me can probably tie-in KSh. 1000 in a pre-paid card for up to a month and use it to pay whenever needed. The common “hand-to-mouth” mwananchi who is probably paid a daily/weekly wage has erratic spending patterns. He may decide to walk to work when the budget is tight or perhaps just need to buy food on a day when there’s no work. In my opinion, Lipa-na-Mpesa will have an upper hand if the rest do not consider cash-out.

  • Buggz at 12:28:31PM Monday, June 16, 2014

    Good pointers here. many thanks for a very informative article.

    My take is that the fragmented payment systems will eventually agreed on a basic standard which will then allow for a national switch so that the different card holders can use whichever service provider regardless of the provider in the background.

    Alternatively, legislation to intoduce a central authority would be eneacted. This authority would ‘own’ all routes and matatus would apply to ply each route. Payments to players would be based on adherenece to schedule…rather than number of trips made.

    Slightly wishful thinking perhaps but a man can dream.

  • leland salano at 15:38:12PM Monday, June 16, 2014

    For emergency services, the PSV owners might consider loading one or more cards of the different providers for their vehicles to be given to their conductors. Doing so will assist in paying for those whose cards are stolen but have cash, transferring passengers to other Matatus by paying for them in the respective vehicles or come to the aid of those in need as someone gave a description of the “The common “hand-to-mouth” mwananchi who is probably paid a daily/weekly wage has erratic spending patterns”. The same will also alleviate the idea that they need a little cash to cater for small repairs
    ( After all this is supposed to be taken care of by the owners by simply providing them with an operation “float “that they are accountable for.” The matatu owners and crew can therefore go through the transaction statements against the cash at hand.
    Thinking of emergency measures, why not come up with a system that will cater for a physical card as well as a PIN entry system in case one has forgotten/ lost a card or a phone for that matter. This way passengers can opt to use a PIN/ PASSWORD for their transactions.
    One way or the other, there must be a minimal cash transaction as I believe that you cannot purely run a cashless system without cash as it is with running a Wireless system without wires! There must be a place where wires come in

  • Victor Fidash at 08:41:14AM Wednesday, June 18, 2014

    My 1963 card that has already been adopted by some MOA compliant buses should be more efficient, if all that is said about the cards is executed effectively. However my main concern is for the majority of people who are at the base of the pyramid. Such can only manage 20 bob or 50 at most (which is hustled every other day) for fare. Th challenge for them is getting that 500 or 300 to top up and use as fare everyday. With our Kenya culture of bargaining and waiting to pay less we can only hope that this cashless system does not lead to transport quagmires.

  • Mike McKay at 13:38:45PM Wednesday, June 18, 2014

    Thanks for the writeup. I’m confused about one thing though – how can MPESA be used offline? Was that a mistake?

  • Angela Okune at 13:42:48PM Wednesday, June 18, 2014

    Hi Mike, By “offline” we meant that since mPesa is a SIM-based application, you do not need to be online on the Internet and only need mobile network. Thanks for your question.


  • Shirl at 14:23:29PM Saturday, June 21, 2014

    The cashless payments, in theory, should work despite all the teething problems described above. Case in point, was how well the megarider worked. Standardised routes, with matching fares, depending on the zoning et al.

    I think there needs to be a bit more thought put in and around the recharging of the vouchers, whether that means a chip-based card, a mobile phone, or whichever other desired form factor.

    For the daily/weekly wage earners, I still don’t see it as a problem. Tis simply a matter of ensuring that they can top up daily/weekly.

    As far as being robbed in concerned, I think the situation remains the same, as when you’re robbed today. You’re still in a tight position.

    I agree with the privacy issues as well; if I am in sales, and I spend a lot of time switching buses & mats, I don’t want all those different people having my details. I’d rather have a card I can easily top up, bila having to share my info with the public transport operators.

    My two cents.

  • James Wanderi at 16:23:38PM Wednesday, June 25, 2014

    There are alot of grey areas revolving this novel idea by the Government. I also see consumer and its civil socities fighting it to their last penny. If I normally take a UMMOINER bus from Umoja which accepts Twende Card and I have Beba pay then it means that I will have to wait a bus that accepts my card, this will incovenience me as I will probably be run late to my destination. I think as a consumer my rights will be infringed as my choices will be limited. Consumers must enjoy the right to choose.
    I will not also acquire all the cards in the market so that no bus will leave me. This is cumbersome. This burden should be transferred to the merchant/bus operator who will have to accept any card presented to them. This will make me, consumer/passenger, use only one card on all the buses.
    However, greater impediment will come from the bus touts/conductors/drivers who on a daily basis go home with a substantive loot. I piloted a receipting system with a handheld POS devices with several buses belonging to a very reknown bus SACCO, 2 years ago, and it was a big disappointment. The bus attendants had a barrage of excuses to not use the the devices.
    There should be a consulative forum for all the stakeholders i.e GoK, bus SACCOS, MOA,MWA and Techies (Card or solution providers) to discuss how and when to roll this mode of payment.
    I am at it again, but this time around I am coming up with an NFC card + Android app. But consiously I know I am diving into a very a big confusion and something that will never work but if it does then the gains will be unmatched.
    Perhaps you could initiate the above forum!

  • Anthony at 16:37:28PM Thursday, June 26, 2014

    On the issue of multiple cards, and multiple service providers, this article should help – . The company has introduced an integrated POS system. Or so they say. But I agree, there are a lot of grey areas that need ironing out. Good, informative article nonetheless.

  • Digenius Ndiema at 07:54:26AM Monday, June 30, 2014

    True.Lipa na Mpesa is almost cross cutting and very much available

  • waweru henry at 12:24:51PM Monday, June 30, 2014

    Hello there…sometimes we don’t realize how big the matatu industry is-so we need payment systems that work and provide alternatives during downtimes and hacking..hello! so there’s no need for these supremacy battles coz no single system can work flawlessly.
    It would have been better for the transition to be more deliberate-considering the amount of traffic it will generate on the networks and also the question of refunds.There are many questions around it and it’s only fair that they are answered even by the software providers like equity bank and tap-to-pay

  • waweru henry at 12:31:57PM Monday, June 30, 2014

    Clearyl there are many issues around the cashless payments and answers are needed.We know very well that the mobile network is weak and so i’m wondering what will happen when there is congestion-a lot of mobile traffic will be generated and so at first we need real alternatives.
    Second:how about refunds-these are ligitimate questions and it’s only fair to clear the air

  • Kevin at 13:19:53PM Monday, June 30, 2014

    I guess I use a different part of the brain. Some new trends could include
    1. Increase in purchases of bicycles and motorcycles
    2. People moving closer to where they can walk to often
    3. Banks seeing more movement of cash from bank a/c into mobile phones at an alarming rate

  • Wambugu Kanyi at 23:27:28PM Monday, June 30, 2014

    @ Antony. thanks for the link. if I was an operator I’d go for this . (after considering their changes -% and how long it takes to liquidate my income plus cost of gadget.)

  • Boni at 11:36:41AM Tuesday, July 1, 2014

    @Bugzz, Currently the Transport Licensing Board (TLB) ‘owns’ all the routes and every year each matatu applies to ply a certain route if they satisfy all conditions for licences. The only problem is the TLB does nothing beyond collecting money for KRA to operate on those routes and the occasional crackdown on non compliant matatus.

  • Robert Abuya at 19:18:06PM Tuesday, July 1, 2014

    What no one seems to have a good answer for os why we need this cashless systems. As adults and children surely we can use money (notes and coins). Those who find a need for cashless systems can use them as they have been doing. Operators who feel these systems add value to their services will opt to provide them. These unnecessary cumbersome regulations are just another example of the government interfering where it should not. Am I the only one tired of this pushy nanny state.

  • Pablo at 16:26:48PM Tuesday, August 5, 2014

    @Angela, you are connected to a GSM network, remember..

  • Angela Okune at 19:56:21PM Wednesday, August 6, 2014

    That’s right Pablo. That’s exactly what I meant when I said “mobile network.” Thanks for your clarification.


  • Roshan at 13:56:35PM Monday, August 11, 2014

    I am researching about cashless technology and payment systems in transport sector in India and would like to speak to you. Your blog has given us a better understanding of the adoption of cashless payment in Kenya and I would like to connect with you on this. Please share your email id Angela… Thanks

  • Angela Okune at 20:28:24PM Monday, August 11, 2014

    Thank you @Roshan for your interest. You can reach me at angela [at] ihub [dot] co [dot] ke.

  • gideon at 12:33:48PM Monday, August 18, 2014

    have read your article and it has been so beneficial in my research project. but i would want to get more insight on the use of the cards. would you please recommend to me other readings, journals or books.


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