Using Prepaid Cards to Encourage Electronic Payments in Kenya

When we talk about payments technology in Kenya, we usually start with the mobile device. There is no doubt that mobile is a successful tool for offering access to financial services and a viable alternative to making payments with cash, however, mobile isn’t a silver bullet.

Whilst the increase in mobile transactions is compelling, cash still makes up a huge proportion of transactions – over 90 per cent in Kenya in 2015 according to KPMG. As mobile technology has been adapted to meet the needs of Kenyans, there is no reason why the same can’t be achieved with prepaid cards. With the habitual break in the use of cash that the mobile device has brought to this country, this change in traditional payment behaviour can be – and is being – extended to prepaid as an introduction to more formal banking services.

In Kenya, currently prepaid cards are more known for their use by the wealthier populace for multicurrency capabilities: popular amongst importers, exporters, people that regularly travel for business and students living abroad, using this card type to make online transactions and to reduce exposure to foreign exchange fees.

However, like mobile, due to the diverse application of the product, prepaid is also making inroads into ensuring banking is more accessible for everyone. Successful projects in Kenya range from the launch of the SalaryXpress prepaid card which allows employers to issue prepaid salary cards, to banks partnering with universities to load student’ loans onto prepaid cards.

Banks, such as KCB have introduced prepaid products such as Pepea and Me Cash cards which can be used both online and in store, much like a regular debit or credit card but without the set up or idle fees. Major retailers across the region are also encouraging use by offering loyalty points when customers pay with their prepaid store cards.

As the government, financial institutions, network providers and retailers continue to encourage both the use of electronic payments and rollout the benefits to everyone, the growth in the adoption of prepaid cards and mobile transactions are only set to increase. It is this learning of new financial behaviours and moving away from using just one payment channel that is making Kenya a case study for innovation in sub-Saharan Africa. However, while the country is considered ‘cash-light’ in relation to the rest of the region, the Reja Consumer Report by Consumer Insight indicates that because Kenyans remain faithful to traditional cash payment systems, there is still a long way to go to move the economy from cash dependence to electronic transacting.