Globally, government adoption of prepaid cards has been increasing. For African countries, challenge is to increase financial inclusion to reduce cost and drive economic growth. Government of Kenya has recently taken up initiative to promote multi-purpose prepaid Huduma Card to increase financial inclusion in the country. This initiative was announced at World Economic Forum (WEF) 2017 on Africa. MasterCard is one of the technology partners of Huduma. It can be obtained at Huduma centers and four partnering banks CBA, DTB, EQUITY and KCB. It can be accessed by both banking and unbanked population as credit check and bank account are not mandatory for the service. The card is embedded with chip and PIN technology allowing customers to send and receive social payments in stores as well as online thus promoting cashless transactions. It can be accessed globally and funds are protected even if the card is stolen or lost.
It is helping Kenyan citizens to gain access to critical government services. It also has integrated state services that allows Kenyans to access public initiatives such as National Hospital Insurance Fund (NHIF) and National Social Security Fund (NSSF). As part of strategy, Huduma team members are looking at various opportunities to drive adoption and usage of this card. One such prospect is public transport pilot in collaboration with Matatu operators. Since most Kenyans depend on public transport, transit payment solutions are the most effective way to reach out to mass customers. Government plans to reach out to 13 million citizens through this initiative over a period of 7 years.
Financial inclusion scenario is on the rise in Kenya. Approximately, 75% adults in the country have bank account as of 2016 in comparison to 66.8% in 2013. There has been 50% increase in number of Kenyans included within financial system over a period of 10 years. Alternatively, financial exclusion has decreased to 17.4% which is half of 2006 figures. This shows increased customer adoption towards financial services and interest in alternative financial solutions such as prepaid cards and mobile payments, making Kenya an effective emerging market for such solutions. MasterCard has plans to reach out to 500 million people worldwide by 2020 and partnering with Kenya government for Huduma initiative is expected to contribute positively towards this cause. It also opens up new prospects for others players in terms of business expansion and revenue generation in Kenya.
According to PayNXT360, social security and other government benefit programs prepaid card market in terms of transaction value is expected to record a CAGR of 31.3% during 2017-2021 to reach US$ 902.3 million by 2021, increasing from US$ 303.6 million in 2017.
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