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Kenyans dump plastic cards for mobile money

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The use of plastic cards in Kenya was flat in 2017 pointing to the challenges the mode of payment is facing in the country where mobile money is dominant.

Kenyans made transactions worth Ksh 114.2 billion (US$1.11 billion) per month last year, a Central Bank of Kenya (CBK) report showed Friday.

The figure was recorded from January to December, with the data pointing to stagnation resulting from lack of interest in plastic cards due to prevalent use of mobile money. In total, plastic cards transactions stood at Ksh 1.34 trillion (US$13 billion) during the period.

And in 2016, the country’s monthly plastic card usage averaged Ksh 115.23 billion (US$1.12 billion), from January through to December.

Interestingly, even as the usage stagnated, the number of people holding plastic cards was on the rise in 2017, according to the apex bank.

In January 2017, some 1.49 million people in Kenyawere holding the cards, with the figure rising to hit 1.56 million in June and surging further to close the year at 1.64 million.

Of all the cards, debit cards remained the most popular consisting of 14.5 million or 98% of the total cards. They were followed by prepaid cards at 1.35 million and credit cards at a paltry 200,000 cards.

Analysts attributed the stagnation of plastic cards to ubiquitous usage of mobile money, which has permeated every sector of the society.

Bank customers, for instance, have linked their accounts to mobile phones, withdrawing money from the financial institutions straight into their handsets. This has, therefore, made ATMs almost meaningless.

On the other hand, merchants have obtained paybill numbers allowing people to readily pay their bills via their mobile phones.

READ: African airlines witness 7.9% rise in demand, IATA says

“Plastic cards have little chance of growth in Kenya especially because banks are migrating their services online and linking with mobile phone companies to provide paperless transactions in a cost effective way. I don’t see plastic cards growing,” said Henry Wandera, an economics lecturer in Nairobi.

In 2017, Kenyans’ use of mobile money in the first 11 months rose to Ksh3.4 trillion (US$33 billion) from Ksh 3.2 trillion (US$31 billion) in the previous year.

Commercial banks in 2015 successfully transited to EMV (Europay, Mastercard and Visa) debit and credit cards, a move that was expected to boost the use of the cards.

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