Skift Take
Kenya is a prime example of how far cashless economies need to go, especially for tourist. The nation’s successes will need to be measured against the challenges.
Harriet Akinyi
The Covid-19 pandemic reinforced the worth of digital payments in keeping economies running, particularly the tourism sector. Given that the beginning of the crisis, lots of governments strongly discouraged the use of money, preferring digital transactions instead.
Apart from decreasing the risk of contact throughout the pandemic, the system can enhance a destination’s tourism experience as well as offer competitive advantages when it comes to marketing the locations, they argued.
But Kenya shows some of the difficulties. Even while the country leads the pack when it pertains to digital payments in Africa, the approval of this mode of payment in the tourist sector is still low. Only 15 percent of Kenyans use digital payments as a way of transaction, according to Visa Kenya.
Even making use of M-PESA, which is one of the popular digital modes of transactions, is also low, representing simply 13 percent of transactions while the other modes of cashless deals like Visa take 2 percent.
Possible scams is a huge deterrent for numerous travelers.
John Musau, the general manager of Tamarind Tree Hotel in Nairobi, shifted to a cashless system throughout the pandemic. The system has been great and the hotel has benefited due to the fact that it decreases scams with the entire money heading straight to the bank or M-PESA till.
Yet among the best worries that Masau observes with clients is those of identity theft with a cashless system.
“The recent incidences of online fraud and the risk of hacking have actually made individuals prefer utilizing cash rather of the digital systems like Visa cards. This is regardless of the fact that most people are well informed on digital deal usage” he said.
The 2nd reason why other informed consumers would decline using the digital payment methods is the reality that they spend too much when they have it.
“While this system suggests benefit and cash at hand for most of the clients, it likewise implies impulse purchasing for some who are not disciplined with their finances. To curb this habit, some might choose not to utilize the digital money system and this implies slow uptake in the end,” stated Masau.
Still, he is hopeful that the positives will ultimately exceed the negatives.
“We remain in a better position to manage our cash since it’s banked directly. This avoids the circumstance where cashiers need to physically take money to bank and likewise minimizes the hire of cash in transit cars to carry our money to the bank,” he observed.
Musau included that while switching to digital means accessing clients who no longer carry money, there are still a lot more who choose utilizing money.
“The only downside of changing to this system is that you may lose that conventional client who brings cash to pay expenses. Some choose it because there are no digital problems and likewise it assists them intend on their cash,” Musau stated.
Mike Mwangi, the basic manager at Nairobi’s People Hotel, likewise has the same sentiments concerning the cashless system. One of their biggest advantages was sanitation during the pandemic.
“The cashless system uses flexibility to our clients. It reduces contact and during the pandemic, it was vital in making sure health,” he said.
The Kenyan parks too, have actually not been left when it comes to transforming to the cashless system.
Parks officials say the cashless system has actually guaranteed that the customers are served in less than 5 minutes which sticks to their charter. This as a result increases consumer fulfillment thanks to effective services. It also minimizes long lines guaranteeing that visitors access the centers within the fastest time possible and it’s likewise practical for global tourists when it comes to Visa or Mastercard usage.
Other players who have revealed the shift to the cashless system include Kenya’s nationwide carrier, Kenya Airways, which has extended the system to other airports like the Moi International Airport in Mombasa and the Kisumu International Airport. The airline company looked for to introduce this system as a method of eliminating person to person contact during the pandemic therefore increasing their safety.
“The application of a cashless system helps to support the client shift and preference to cashless transaction and will reduce money collection and reconciliation problems at the airports making sure effective services to customers,” stated Julius Thairu, the chief industrial and consumer experience officer for Kenya Airways.
Running in more than 200 countries, Visa is the global payment leader with more than 55 million merchant areas worldwide. There are also 3.5 billion cards being used by its clients out there worldwide. However even with these numbers, it is still searching for more partners particularly in the tourism market to open the nation. Historically, Visa Kenya handled banks when it concerns accessing its clients. However they have made a collaboration with Safaricom’s M-PESA to create the M-PESA GlobalPay VISA Virtual card which is customized to satisfy the increasing needs of Kenyans utilizing global apps and shopping websites for entertainment, retail, service and even when taking a trip abroad.
“Visa is dedicated to broadening the payments ecosystem throughout Africa by opening the worldwide marketplace for every single consumer. This collaboration with Safaricom is a crucial action in helping to attain this,” states Corrine Mbiaketcha, vice president and general manager for East Africa at Visa.
The virtual card will allow 30 million M-PESA users to make cashless payments at Visa’s worldwide network of merchants. Users can trigger the virtual card through the M-PESA mobile app or by USSD. Previously, M-PESA users might just make mobile money payments within M-PESA’s network of almost 400,000 merchants.
With the introduction of M-PESA in 2007, Kenya has actually ended up being a worldwide pioneer in mobile payments that has changed the dynamics of its economy. The M-PESA innovation has actually since been exported to majority a dozen nations in Africa, Asia and Eastern Europe and has become a case research study at business schools throughout the world, and mobile money is now the predominant mode of payment for small-scale transactions in Kenya. Many innovative economies are yet to catch up with Kenya on mobile cash usage.
“We are thrilled to work together with (mobile network operator) Safaricom, especially in this period where we are seeing an accelerated switch from conventional cash towards digital spending. By leveraging our huge global network and experience in addition to Safaricom’s regional know-how and big subscriber base, we are charting a brand-new path for digital payments. We remain positive that this collaboration will go a long way in opening the worldwide e-commerce market to Kenya’s significant unbanked and under banked population,” said Mbiaketcha.