“Kenya is a cash based economy”– Not.

Riding a matatu is one of my favorite activities and without the carbon monoxide and blaring reggae music, the experience is just not complete. Elaborate light shows are just a bonus.

The Kenyan government has partnered with Google to introduce a new Android based transit card system to replace the current cash based “system.” The idea is to standardize price, eliminate volatility in drivers’ incomes (reducing incentives to drive badly) and efficiently tax the ridership.

The NYT did a great write-up on the Kenyan transit card effort, which I won’t rehash here, but one part of the article stuck out to me.

One of the matatu drivers expresses his resistance to the pre-paid digital system by barking “Kenya is a cash based economy!”

Nothing could be further from the truth. Digital payments are common everywhere in Kenya now. People send and receive money regularly through the M-PESA system, with transactions exceeding 6 billion dollars per month in a country where the average person makes less than $5 a day, many much less.

People buy things at the biggest and the smallest stores with M-PESA, as evidenced by a visible placard displaying the shops M-PESA number. I buy groceries with M-PESA, gas and even have paid my rent with M-PESA. Once, I even bought a $.50 bunch of bananas with M-PESA from an informal vendor on the side of the road.

In Nairobi, where it’s always possible to get robbed, M-PESA is great. I don’t have to carry around big wads of cash with me. Even if my phone gets ripped off, I can still access my money digitally.

Cash is a fiction. While it may seem like poor people benefit from using pieces of paper inscribed with pictures of the first president, cash is unwieldy and simply unsafe in many cases. Moreover, the crumpled and worn bank notes are easily lost and change not always available. Try using a 1000 (or even a 500) schilling note to buy bananas. You’ll be waiting a long time.