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  1. Analysis
February 24, 2016

Africa blazes the contactless transport trail

Although Europe has made significant steps in developing contactless payments for public transport, the rest of the world has lagged behind. Another small country is pioneering this technology. Commuters in Kigali will now have access to a card for public transport and Africa is interested. Alexander Atkins reports

By ALEXANDER atkins

Although Europe has made significant steps in developing contactless payments for public transport, the rest of the world has lagged behind. Another small country is pioneering this technology. Commuters in Kigali will now have access to a card for public transport and Africa is interested. Alexander Atkins reports

In the last ten years, Africa has found ways of using technology to conquer the financial challenges surrounding its unique environment, most notably with its growing mobile money schemes which represent important developments in its push for a cashless society.

However, it is in the small nation of Rwanda, that a further development has been taken.

The capital, Kigali, a vibrant city in the centre of the country with a population of just over 1.1 million, has recently experienced new technology on its public buses in the form of contactless pay-as-you-go cards.

The cards, similar to the ‘Oyster’ card developed by Transport for London (TfL) for use on the city’s public transport system, can be used in the same format on the buses around Kigali.

The company behind them is the AC Group, a Rwandan technology firm providing smart transport solutions.

The CEO and vice-chairman of the group, Patrick Buchana, talking to CI, believes that the new system will hugely benefit both the bus services and the customers using them.

"Together with the government of Rwanda, we have launched a cashless public transport system where every commuter using public transport is obliged to use a card," says Buchana. "People will be required to buy the card and by May this year, the entire public transport system will be cashless," he adds.

Each bus has been fitted with an onboard bus validator that will read the contactless card when users swipe on it and so far two of Kigali’s three bus operators have signed on to the scheme.

The initial cost to the commuter will be around $1 for the smart card and they can be topped up using mobile money schemes, such as Tigo Cash, and through a network of mobile agents along the bus routes and at the bus stops.

However, Buchana has plans to make topping up even easier. "Soon we are going to also have standalone vending machines where someone will be able to purchase and top up a card at any time by themselves," he explains.

Becoming the new normHowever, for the people of Kigali, this new system won’t be a choice. For now, the bus companies are accepting both cash and smart card but by May, anyone wanting to use Kigali’s public transport will have to purchase a card.

"The cards have been greatly subsidised so people can afford them and at the moment, those using the cards are entitled to a 10% discount unlike those using cash," he says, adding that this provides a strong incentive to become a card holder. Of the 1.1 million in Kigali, it’s estimated that 800,000 of those are using public transport.

One operator that has signed on is Kigali Bus Services (KBS). The company began operations in 2006 and had earlier introduced a similar tap-and-pay network, based on the system used in Hong Kong with the Octopus card.

Brendan Maguire, on the board of directors for KBS, states that the biggest challenges the new scheme faced were public uptake and access to top up facilities.

This is not his first encounter with tap-and-pay technology however, as he previously worked with the Hong Kong based TaptoPayLtd on similar projects in Kampala and Nairobi, although the systems face more different and complex challenges in those markets according to Buchana.

Yet Maguire is confident that this is only the beginning and that the next step will be to put in place EMV based technology to allow contactless debit and credit card payments.

Until then, however, all those involved stress that the benefits of the current project will be numerous. "Allowing passengers to load tickets or credit in advance of travel will speed up boarding times and reduce queues massively," says Maguire.

Buchana agrees that this will be a major advantage. Previously, the handling of cash meant that customers would have to queue up to buy tickets, delaying the buses.

"With the smart card, boarding the bus is faster and means buses can be properly scheduled and the regulator can better monitor bus movements," he says.

However, there is also a more unusual benefit. Previously, bus operators were losing almost 40% of their revenue, according to Buchana, due to drivers stealing some of the fares, a problem entirely solved with the use of smartcards.

Buchana also insists that as important is the data that they have been able to gather whilst piloting the project.

"The bus companies didn’t have any informed data and their decisions about how many buses to deploy on which routes and at what times were all based on estimations," he explains.

With the data collected through smart card usage, the AC Group has been able to provide information on how many buses are needed, at which locations they are required and at what specific times they must be there, figures which have proved crucial in the operator’s decision making.

Looking abroad for inspirationWhilst new to Rwanda, this system is in use in various cities around the globe and Buchana admits that they looked to cities like London and Hong Kong for inspiration. "As we moved on in the pilot, we took what we could from those cities and we adjusted quite a number of things," he says.

"We want to keep improving the experience for our clients and so the vending machines and other ideas are steps in doing this," he adds.

However, Buchana and the AC Group are already looking beyond Kigali. The company is also hoping to apply this technology to long distance transport throughout Rwanda. Their horizons have further expanded beyond the small nation in East Africa, as Patrick states that they have received a request from the government of Ivory Coast to begin a test pilot there.

"The conditions will not be so different to those posed by Kigali, but it is certainly a bigger market which in itself is a challenge," says Buchana.

But Rwanda is not the first in Africa to try to implement smart card technology for transport. In South Africa, commuters were introduced to the Muvo Card, a similar system for public bus transport in Durban.

The project was developed in conjunction with South Africa’s National Department of Transport and Standard Bank, with help from international digital security company, Gemalto.

The resulting card is an anonymous EMV payment card issued by Standard Bank, but not restricted to Standard Bank customers."The scheme enables those living in the city of Durban to pay for transit fares with no need for cash or a separate travel card," says Paul Opie, field marketing manager for Africa at Gemalto.

"It was designed with careful attention to the safety of its users, as the cards are protected against theft, and are authenticated with a pin number of the customer’s choice," he adds.

The project was planned over two years and implemented in 2012. Opie states that in planning the concept, they did look to TfL’s system, searching for an interoperable solution such as the one implemented across London’s various modes of transport.

As with the project in Kigali, Opie admits that a major challenge lay in challenging people’s mentality about contactless payment cards.

"Whilst there are so many benefits of using contactless cards, such as saving time and not having to worry about taking cash out, people are so used to using cash for payments, especially for travelling," he says.

However, the success of the scheme can be seen in it uptake in other cities. Although differing in name and sometimes issuing bank, similar projects have sprung up in Johannesburg, with the Bus Rapid Transit System, and in Pretoria and Cape Town, with My Citi, involving banks such as ABSA and Barclays Africa as well.

"The project is currently in its early stages but is already seeing great interest so far," says Opie. "We’re moving towards a cashless society, and the Muvo card helps take South Africa one step closer towards it."

However, Opie admits there are still challenges ahead, namely interoperability, ‘which has not been achieved between different cities yet, but we’re confident this will happen eventually’.

In transitioning towards a cashless society, Maguire believes Africa is in some ways ahead of the West: "This is true especially concerning mobile payments where the mobile payment, rather than the computer, is the platform," he says.

"Even with Apple’s new NFC systems, they are mostly online and not offline peer-to-peer, something that is less suitable for Africa where the internet is so unreliable," he adds.

This is contrasted to mobile money schemes such as M-PESA which relies not on internet for P2P payments but simply on network coverage.

However, Buchana reminds us that there is in a long way to go to a cashless society in other respects.

"Support from governments in crucial in schemes such as this, and without it, it makes things very difficult," he explains. "In Rwanda, we have had a lot of support from the government who are keen for a cashless system as they believe it will be very helpful for society."

Opie has a similar opinion: "Cash is still king in Africa and naturally there will be some resistance to change, with public transport drivers particularly wary of systems that can monitor the actual value of transactions on a daily basis.

The next step for card issuers is to encourage Africa’s citizens to embrace the transition from cash-based payments to digital wallets."

Whilst both markets still have many challenges ahead, the spread of contactless travel payments in such a diverse and tricky continent for transport methods is promising. Yet with more development on the horizon, as well as the spread of the scheme to other parts of Africa, it bodes well for a society that continues to come up with new substitutes for cash in an environment with such unique factors.

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