How painful Nairobi matatu trip led to cashless fare business

Tap n Go

 Move Fare Technologies Limited CEO Jean Hus (left) and Joseph Wanjigi demonstrate how the Tap and Go cashless fare collection system works on July 25, 2023.

Photo credit: Francis Nderitu | Nation Media Group

When Jean Hus Niyomahoro came to Kenya in 2016 to study finance and economics at the Kapsabet-based University of Eastern Africa, Baraton, he had no idea that seven years later he would be immersed in making matatu fares payment cashless.

Coming to Kenya, the Rwandan had assumed that Kenya’s multi-billion-shilling public transport system would be seamless and cashless like that of his home country.

Kenya’s public service vehicles (PSVs) carry millions of passengers annually with the sector tipped to continue growing boosted by a rapidly rising population estimated at more than 50 million which has pushed operators to import more vehicles to meet demand.

For instance, the total number of newly registered motor vehicles stood at 99,365 in 2022, according to data from the Kenya National Bureau of Statistics (KNBS). The number of newly registered buses and coaches more than doubled from 893 units in 2021 to 2,173 in 2022.

Yet, he was surprised that passengers mainly pay fare in cash despite paying for other goods and services using mobile money. As fate would have it, the cash payment came to haunt him one day.

Cashless matatu

The Tap and Go cashless system used to collect fares from commuters on a public transport vehicle on  July 25, 2023.

Photo credit: Francis Nderitu | Nation Media Group

“One day I boarded one of the matatus to Kayole and I gave the conductor a note of Sh1,000. Along the way there was a huge traffic so I fell asleep. On waking up, I realised the conductor was not the one that I had given the cash. The new conductor refused to give me the change, which was a painful,” says Mr Niyomahoro.

Smarting from this experience, he spotted a niche on the market to make payment of fares cashless. But there was a problem; some technology start-ups had come up with a similar idea, rolled out their products but failed.

In 2018, he embarked on market research, conducted interviews with drivers, conductors, matatu saccos and owners to understand why attempts at making the process cashless had failed.

“I learnt that these start-ups had failed largely because they took the control over money from conductors and drivers. These people rely on this cash to do daily operations such as buying fuel, doing vehicle repairs and even eating lunch. When you try to take this cash away from their hands they will definitely resist,” says the entrepreneur.

Mr Niyomahoro approached a firm that successfully rolled out the system in Rwanda to partner with him in Kenya but the firm was not interested. Stranded, he reached out to the Turkish firm which had provided technical support to the Rwandan firm and it agreed to partner with him.

This is how he started Tap&Go, a mobile app that allows passengers to top up their accounts from their mobile money wallets. The conductor then scans the app to automatically deduct the fare at no charge to the passenger. The money then goes to the conductor’s wallet, leaving the crew in charge of the collections. To attract and retain users, passengers who frequently use the service can borrow fare through the technology.

“Then the Covid-19 pandemic happened and the government put in place measures for adoption of cashless transactions. This gave a huge boost to our business. This enabled us to push our idea forward and get some of our first customers,” he says.

The Central Bank of Kenya (CBK) in March 2020 waived cash transaction charges for low-value transactions of Sh1,000 and below to reduce the spread of the disease through handling cash.

The move saw a significant rise in the number of matatus accepting mobile money payment of fares by passengers.

Tap&Go has partnered with a number of saccos on the Eastlands route, including Buruburu, Dandora and neighbouring areas. The company generates its revenue from a commission it negotiates individually with each matatu sacco and expects to expand its operations to other routes.

The National Transport and Safety Authority (NTSA) issued some 35,897 road transport licences during the period, underlining the huge public transport market in the country. This includes 12,229 licences for 14-seater matatus, 11,699 permits for mini-buses of between 15-33 seats and 11,969 licences for bigger buses.

“We are looking ahead to partner with more public transport companies to make it convenient for more passengers to pay and borrow fare and not worry about their change from conductors. For conductors, they also no longer have to worry about looking for change for customers,” said Mr Niyomahoro.