Like any other technology revolution, when AC Group's Tap&Go was introduced as a form of fare collection system in public transport in Rwanda, there was a visible positive disruption in the economy. New Jobs have been created, there is more safety of passengers, cutting of revenue leakage and the technology solution has also enabled data driven decisions. This article highlights some of the ways digitization of public transport payments has benefited the Rwandan economy as a whole.
New Jobs opportunities created Tap&Go Agents
Following the launch of Tap&Go in 2015, There was a disruption in both how things were being done and while many seem to think there was loss of jobs, it in fact was to the contrary. There was more job efficiency and more jobs created. Bus conductors were automated and new jobs that didn't exist before were created. About 375 bus conductors operated in the buses before Tap&Go, however, most of them went on to become agents, supervisors, inspectors under the Tap&Go system to help passengers to top up their Tap&Go cards as well as assist new users to understand how the system works.
Today, we have about 311 agents who are working with passengers on a daily basis. Agents earn up to 500,000 FRW a month on average. Many of them also enjoy doing a job where they don't have to physically confront passengers over cash balance and ensuring that the passengers actually pay for their journeys.
In addition to these onsite jobs, there are many other jobs that were created for Rwandan corporate employees including tech, accountants, marketers, COOs and managers who run the day to day cooperate side of the company and continue to deliver innovative solutions to the Rwanda masses. While it is true that bus conductor jobs were phased out, new job opportunities were created as a result. Over 350 jobs were created and more are being created as the company grows and introduces new products and enter new markets. Of course, these are the jobs that are available for the day to day operations of the company to take place but there are other jobs created in the economy around the Tap&Go service that arise from time to time like installation of devices on the bus, etc.
Back in the days when passengers used cash to pay for their commute, there was no way of actually tracking the money that was being collected on any bus route and any point. Today, however, every payment made is recorded and there is visibility on the number of transactions made on each route and at any given point. Bus companies are able to monitor their revenue on the go. Transparency in transactions and visibility has helped bus companies to register up to 30 percent in revenue increase. While there is still room for more to make a bigger impact in revenues and savings, there has been tangible savings for bus companies.
Safety for passengers
Recipients of cash payments not only often have to travel considerable distances to receive their payments, but also are particularly vulnerable to risks of carrying cash, due to the liquidity and transactional anonymity of cash. While security is a concern when traveling with any large amount of cash, this concern is especially salient for regular cash payments, such as social transfer or wage payments that are received at publicly known points in time. Digital payments can also be held more securely than cash payments. By reducing travel times to withdraw money, recipients can store value in either traditional accounts or e-wallets, and cash out smaller amounts at their convenience or directly transfer funds onwards to pay for bills such as electricity. At the same time, it is important to have in place systems to prevent security breaches of digital payment mechanisms (e.g., stolen account numbers). Overall, one could argue that having public transport payments done digitally has increased safety for passengers who faced theft issues when trying to pay by cash in the buses.
This also brings all the benefits of a business moving from being unbanked to banked and all the benefits that come with that like increased credit worthiness.
Data driven decisions
Before Tap&Go, it took a while to be able to collect data around public transport and even when it was collected, it had some inaccuracy. Today, however, this has changed and most public transport decisions and policies are data driven. Both bus operators and the government are able to make a decision based on the historical data that we have collected. It has been proven that businesses and organisations that use data to derive decisions are more likely to have a competitive advantage.
Increased women participation and empowerment
One of the significant benefits of digitizing payments in both social transfers and remittances is that it can contribute to a G20 commitment of increasing women's economic participation and empowerment. It is worth noting that women represent an increasing share of immigrants in high-income countries and that women are not only receivers, but also senders of remittances (World Bank, 2014a). Evidence suggests that digital transfers empower women within their households (Docquier et al., 2009). This is particularly true for recipients of the social cash transfer, because, in contrast to cash payments, digital payments are often private information that allows the recipient to conceal the payment at least temporarily from other household members or friends who may place demands on the use of the money. Sociocultural issues and other "cultural" factors have for the longest prevented women in Rwanda and other countries from controlling their own money and assets. And thus, digital payment might give recipients agency with regard to how the money will be used.
Empirical evidence at the micro and macro levels shows that inclusive financial systems are an important component to economic and social progress on the development agenda (see Cull et al., 2014, for an overview). Digital payments are often the first entry point into the financial system for individuals and provide an opportunity to offer accounts--however, these have typically been through banks. This is a challenge that has left many average citizens excluded from the systems. Tap&Go however, is filling in the gaps of financial inclusion to allow even those at the bottom of the spectrum to still access digital payments. Such inclusive digital payment systems allow for economic growth, women empowerment and continued inclusive innovation.
In conclusion, there is no innovation that comes with only positive impacts, however, innovation that elevate individuals, uplift communities, and develop economies is the kind of innovation that is worth betting on- it is one that comes with more benefits than many realise.