KCB and Visa have partnered to offer NFC-based contactless payments. Telco Safaricom launched a similar service backed by M-PESA but failed more than five years ago.
Kenya Commercial Bank (KCB) will now offer customers contactless payments via Android smartphones or Garmin wearables. The product is a first in Kenya, as other similar contactless solutions are not based on smart devices but on a card such as those offered by Absa and Standard Chartered. Michael Kungu, interim director of retail banking at KCB, said: “Eliminating the need for a dedicated terminal and allowing the merchant to use their mobile phone to accept card payments is revolutionary and represents a significant game-changer in the industry. within the digital payments ecosystem.
Why is this important?
Kenyans use mobile money services to pay bills at various retail outlets. Debit cards are also another way to make payments. However, these two payment channels are not the fastest due to the friction involved. Cards, for example, must be swiped and then authenticated with a PIN. Mobile money payments like M-PESA are even slower because customers have to enter a bill number and authenticate the payment with a PIN.
Contactless payments solve these problems as they offer convenience. They are quick and easy to use, as there is no need to enter a PIN code for all frequent and minor transactions.
Contactless payments offer benefits to multiple stakeholders. Issuing banks, in this case KCB Bank, benefit from higher revenues as customers prefer to use cards for low-value transactions rather than cash. Retailers enjoy faster checkout processes, increased security through reduced cash handling, and a better customer experience through shorter queues.
Preparation of contactless payments
KCB, Visa and Thales have partnered to introduce a new service for in-store payments using the KCB app and near-field communication (NFC) enabled smartphones. Customers must scan their KCB Visa card through the banking app as a one-time setup to use the service. Once the card details have been stored on their mobile device, customers can make payments by opening the app, selecting NFC payments, holding their phone up to a contactless-enabled payment terminal and entering their PIN to complete the payment. transaction. The PIN will only be needed for large transactions or less frequently accessed shops.
The only problem that can be identified is that a customer’s smartphone must be equipped with an NFC chip for the service to work. While many modern phones have NFC, some manufacturers are skipping the chip for cost-cutting reasons.
“We are constantly working with our partners in the banking sector to enable new and improved experiences for consumers. We applaud KCB for pioneering this technology in Kenya, which we believe will offer customers secure and convenient payment experiences. It builds on the work we’ve done to expand contactless payments, which has grown substantially over the past three years. This milestone is also indicative of the continued investment Visa is making in secure, reliable and seamless digital payments as part of our mission to help people, businesses and economies thrive,” said Eva Ngigi-Sarwari, country manager of Visa Kenya.
In 2017, Safaricom launched a similar product based on M-PESA and NFC. The telecommunications company has provided an NFC tag that can be connected to smartphones for M-PESA payments in retail stores. The One-Tap product did not work and was subsequently discontinued.
The use of bank cards to make payments is on the rise in Kenya. According to the Central Bank of Kenya (CBK), only 676,275 bank card transactions were made in August 2014. As of May 2022, that number had grown to 4.4 million transactions.
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