January 20, 2015

Hitler v. modern western state of the art transit payment systems: Hitler 1, rich white boys 0.

As predicted in the first day we saw it (and published on this blog much later), mass transit payment systems are failing in Kenya:

Payment cards rolling back gains in Kenya's public transport sector

by Bedah Mengo NAIROBI (Xinhua) -- "Cash payment only", reads a sticker in a matatu plying the city center-Lavington route in Nairobi, Kenya. The vehicle belonging to a popular company was among the first to implement the cashless fare payment system that the Kenya government is rooting for.

And as it left the city center to the suburb on Monday, some passengers were ready to pay their fares using payment cards. However, the conductor announced that he would not accept cashless payments.

"Please pay in cash," he said. "We have stopped using the cashless system."

When one of the passengers complained, the conductor retorted as he pointed at the sticker pasted on the wall of the minibus. "This is not my vehicle, I only follow orders."

All passengers paid their fares in cash as those who had payment cards complained of having wasted money on the gadgets. The experience in the vehicle displays the fate of the cashless fare payment in the East African nation. The system is fast-fading from the country's transport barely a month after the government made frantic efforts to entrench it. ...

It's probably too late for them now, but I think there are ways to put such a system out through Kenya's mass transit. You just don't do it that way because the market will not accept it. Rejection was totally obvious, and not only because asymmetric payment mechanisms don't succeed if both sides have a choice:

The experience in the vehicle displays the fate of the cashless fare payment in the East African nation. The system is fast-fading from the country's transport barely a month after the government made frantic efforts to entrench it.

The Kenya government imposed a December 1, 2014 deadline as the time when all the vehicles in the nation should be using payment cards. A good number of matatu operators installed the system as banks and mobile phone companies launched cards to cash in on the fortune.

Commuters, on the other hand, bought the cards to avoid being inconvenienced. However, the little gains that were made in that period are eroding as matatu operators who had embraced the system go back to the cash.

"We were stopped from using the cashless system, because the management found it cumbersome. They said they were having cash-flow problems due to the bureaucracies involved in getting payments from the bank. None of our fleet now uses the system," explained the conductor.

A spot on various routes in the city indicated that there are virtually no vehicles using the cashless system.

"When it failed to take off on December 1 last year, many vehicles that had installed the system abandoned it. They have the gadgets, but they are not using them," said Manuel Mogaka, a matatu operator on the Umoja route.

As I pointed out the root issue they missed here was the incentives of, well, just about everyone on the bus!

If someone is serious about this, I can help, but I take the real cash, not fantasy plastic. I spent some time working the real issues in Kenya, and they have more latent potential waiting to be tapped than just about any country on the planet. Our designs were good, but that's because they were based on helping people with problems they wanted solved and were willing to work to solve.

The ditching of the payment cards means that the Kenya government has a herculean task in implementing the system.

"It is not only us who are uncomfortable with the system, even passengers. Mid December last year, some passengers disembarked from my vehicle when I insisted I was only taking cashless fare. I had to accept cash because passengers were not boarding," said Mogaka.

Not handwavy bureaucratic agendas like "stamp out corruption." Yes, you! Read this on corruption and not this:

Kenya's Cabinet Secretary for Transport and Infrastructure Joseph Kamau said despite the challenges, the system will be implemented fully. He noted that the government will only renew licences of the vehicles that have installed the system.

But matatu operators have faulted the directive, noting that it would be pointless to have the system when commuters do not have payment cards.

"Those cards can only work with people who have regular income and are able to budget a certain amount of money for fare every month. But if your income is irregular and low, it cannot work," said George Ogundi, casual laborer who stays in Kayole on the east of Nairobi.

Analysts note that the rush in implementing the system has made Kenya's public transport sector a "graveyard" where the cashless payment will be buried.

"The government should have first started with revamping the sector by coming up with a well-organized metropolitan buses like those found in developed world. People would have seen their benefits and embraced cashless fare payment," said Bernard Mwaso of Edell IT Solutions in Nairobi.

(Obviously, if the matatu owners don't install, government resistance will last about a day after the deadline.)

Posted by iang at January 20, 2015 08:08 AM
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