More Businesses Revert to Cash Transactions Due to Reversals from Customers

When the Covid-19 pandemic broke out last year, the government announced several measures including the adoption of paperless transactions to curb the spread of the virus. A year on and things are almost back to pre-pandemic period. The idea of paperless transactions worked best for buyers, but most sellers and service providers are quite happy to revert to cash transactions.

At Ngara Market in Fig tree, the fruit and vegetable vendors insist on cash payments, and in cases where the customer does not have cash, they are redirected to a shop where they can withdraw money. Since the transaction fee waiver for amounts less that Sh1,000 lapsed, more traders are not willing to take mobile money payments. The transaction fees have gone back to normal, meaning it will now cost them more to withdraw the cash from an agent.

Matatus and Boda Boda Riders also stopped allowing commuters to pay their fare using mobile money. During the pandemic last year, they had been urged to accept electronic transactions in a bid to curb the Covid-19 virus.

Read: Kenyans’ Mshwari and Fuliza Loans Hit Sh432 billion in 2020

Apart from reducing the number of passengers by about half, commuters had to sanitize their hands, ensure they had a mask on and keep the windows open to allow a free-flow of air. In addition to this, they were urged to pay using mobile money to ensure minimal contact with other commuters. To pay fare, one would simply hand over their phone to the conductor who would input their M-pesa number and hand it back.

Since then, things have changed drastically. Get into any matatu in town and there are high chances you will find some creative sticker written “No Mpesa, Cash Only.” Just in case the message is not clear, the conductor will from time to time shout to alert users. If you do not have cash, you will be redirected to an agent where you can withdraw money prior to boarding the Public Service Vehicles (PSVs).

The costs associated with sending and receiving small amounts of cash have made business people opt back to cash transactions.

Read also: Safaricom Among 29 Firms Licensed to Install Cashless Payment Platforms in Matatus

One Boda Boda Rider, Julius, had to wait for their customer to find an agent and withdraw cash as he had an outstanding “Fuliza” on his phone. More people are using Safaricom’s overdraft service, and sending money to their phones means it is automatically deducted to pay the loans.

The NCBA Bank Financial Report 2020 showed that Kenyans borrowed Sh432 billion from Mshwari and Fuliza in 2020. Julius said that at the moment, life is hard, and he would rather have the cash from the customer than have it get “swallowed” on Fuliza.

A number of vendors also attributed their reluctance to increased fraud from the customers. Some of them reported that once a customer is done shopping, they send the money only to reverse it within a few minutes after they leave. This has made more businesses wary and in places where a till number is not available, only cash is allowed.

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