*Marlen de la Chaux  is a Gates Scholar at Cambridge University's Judge Business School, pursuing a PhD in Management Studies. She is currently a visiting research fellow with iHub in Nairobi, where she studies the opportunities and challenges associated with ICT innovations. Photo credit: Wiki Commons and Felix O.
In Nairobi, cash is slowly becoming obsolete. The mobile phone-based money transfer service MPESA lets users pay for nearly everything: from meals and utility bills to safaris. Only the recipient's phone number is needed and any amount from 10 cents to 750USD can be transferred. But one daily purchase that still requires cash is public transportation.
Although a cashless payment system has been implemented in Nairobi's buses and matatus (colorful minibuses), uptake has been nearly non-existent. The problem is that adopting new technologies often also means adopting new ways of doing things, and that means changing existing power structures. Whereas MPESA supplemented the financial service sector's structure, cashless payment systems are threatening bus and matatu conductors' incomes.
Launched seven years ago, MPESA today dominates daily life in Kenya. Green MPESA signs emblazon shops, bars and even tiny roadside kiosks. "Let me mpesa you" has become a familiar phrase and nearly half of the population has subscribed to the service. Kenya's public transport sector, in contrast, is a complex semi-private system in which commuters are charged highly variable fares. During rainfalls, for example, matatu drivers triple their prices. To make fare payments cashless and more transparent, transport cards such as Google's bebapay or the Kenyan Bus Service's Abiria Card have been introduced.
However, after months of commuting in Nairobi, I have yet to see a transport card in action. In theory, commuters top up the card, the conductor taps it to a phone, a set amount is charged and the commuter receives a confirmation SMS. In reality, matatu and bus conductors are choosing to bypass the system. I have seen conductors pretend the card reader was broken, feign confusion over the card's purpose and even charge commuters a second time in cash after running their card and pretending it did not work. When speaking to a conductor about these tricks, he explained "in this bus, we only pay with cash."
Whereas MPESA is aligned with existing market structures, transport cards are threatening a complex system of shared profits and sub-contracts. Before MPESA, many Kenyans were unable to transfer money because they lacked bank accounts and therefore access to financial services. The transaction volume was too low to be of interest to financial institutions and many Kenyans therefore bought airtime as a proxy, which could be transferred to a recipient. MPESA replaced this system without changing the structure: money transfers are still made by mobile phone, but now as mobile cash and not airtime.
Kenya's public transport system is different from the mobile financial services sector. Cashless payments threaten existing profit structures. Matatu owners usually contract their vehicles to a crew who retain the day's income after paying a fixed vehicle rent. Transport cards instead bypass the crew and payments directly reach the vehicle owner. The owner can then reverse the roles and pay the crew a salary while keeping the profits.
Matatu crews would essentially lose the benefits of a performance-based income. In addition, transport cards charge fixed fares based on distance, meaning that extra profits from rain and rush hour fees are lost. Add to that the popularity of matatus and buses among traffic police officers, who regularly collect bribes from public transport vehicles. Transport cards would render these vehicles cashless and thus no long offer a source of informal income to the omnipresent traffic police.
In this context, it is therefore not surprising that uptake of transport cards has been slow. Yes, these cards would serve commuters' and vehicle owners' interest, but it is the matatu crews and bus drivers who control the systems' day-to-day implementation. MPESA's success and transport cards' struggles highlight that product uptake depends not only on consumers. Much also depends on how new products and services affect a market's existing power structures. Taking prevalent incentive systems seriously may be a first step in devising a solution for more transparent public transport fares in Kenya.