Matatus 1, Google 0: A sobering lesson on digital payments from Africa

by Nikhil Joseph 0

Yet again, Google finds that when it comes to payments superior technology alone is not enough to change behavior. In July 2015, Google launched BebaPay in Kenya, a prepaid card that supported NFC transactions on Nairobi’s minibuses, or matatus as they are known locally. Conductors on these minibuses, who are used to dealing exclusively in cash, have to simply download an app that works on their NFC-enabled Andriod phones in order to accept BebaPay transactions. It turns out things weren’t quite so simple after all:

“Despite government support and the offer of free technology, the cards were never widely adopted by matatu drivers themselves, who were meant to be able to read them using Android phones. The switchover deadline came and went, but card-friendly matatus were still few and far between.
In February Google finally announced that it was discontinuing BebaPay, though the company has been fairly tightlipped about its reasons for doing so. Speaking to Business Daily, the company said: “We are consolidating projects to focus on less within the payments space.””

With BebaPay, Google gave itself the challenge of changing not one but two entrenched behaviors—getting consumers to carry a BebaPay card solely for minibus rides and getting bus conductors to accept digital payments rather than cash. Together, these challenges proved insurmountable for Google.

Conductors, especially, overwhelmingly preferred cash—it kept transactions off the books and tax-free. Moreover, with cash, minibus workers had something to take back home every night. Perhaps a more nuanced approach suited to these local realities would have involved lobbying the Kenyan government to declare a tax holiday as an incentive for minibus operators to make the transition from cash.

The lesson here for technology companies and entrepreneurs is that designing a technically elegant solution to a problem is only half the battle, the next part is testing its appropriateness for a local context and adapting quickly.

Overview by Nikhil Joseph, Analyst, Emerging Technologies Advisory service at
Mercator Advisory Group

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