The first attempt by players within the public transport system to adopt a cashless payment system was in 2014 when financial and technology partners came together to roll out cashless payment solutions.
Billed as the ultimate panacea to the challenge of pilferage and loss of revenue to the government, the project soon ran into headwinds as some stakeholders within the PSV sector felt they had been left out of the existing incentivisation structures among other challenges.
While Kenya has been hailed as a pioneer of a mobile-based money transfer system and a global hub for the fintech revolution, cash is predominantly king as over 70 percent of the population cite lack of access and cost as a hindrance.
Recent trends however point to a considerable preference for card payment, contactless cards, and bank transfers especially in the food, beverage entertainment, and hospitality sectors.
Entry of eco-friendly buses on Kenya’s urban roads has also ignited the debate on the efficacy of adopting a cashless form of payment by commuters. Not to be left behind, some partners such as insurance companies have now compelled public service vehicles insured with them to adopt a cashless form of payment for them to qualify for compensation when involved in an accident.
A deeper analysis reveals the potential transformative impact of this shift on various stakeholders within the public service vehicle transport ecosystem.
The issuance of e-motor certificates by the Association of Kenya Insurers (AKI) four years ago represents a significant leap in facilitating transition towards cashless fare systems, as insurers can effortlessly verify policy coverage in real-time, ensuring compliance and enhancing passenger confidence.
By streamlining the administrative processes, enhancing data integrity, and improving accessibility for both insurers and policyholders, the interoperability of e-certificates with digital payment platforms holds immense potential in facilitating full adoption.
Proponents of a cashless public transport system consider this as an opportunity for insurers to leverage digital technology to enhance transparency, credibility, and accessibility in serving their customers.
The move not only addresses the issue of fraudulent claims but also fosters trust and confidence amongst the passengers, who get the assurance that the risks they face while travelling are adequately covered.
This paradigm shift also opens avenues for innovative payment models, such as pay-as-you-go insurance, tailored to meet the evolving needs of customers. On the other hand, insurers stand to benefit from reduced administrative costs, enhanced customer insights, and improved marketing efficiency, ultimately translating into a positive return on investment.
While industry players welcome the move to digitise the claims experience, insurers now have the hard work of investing in agile software solutions, forging partnerships with insure-techs, and prioritising customer-centricity in product development.
The writer is the managing director, of KCB Bancassurance Intermediary Limited.
