Addis Ababa is a rapidly growing metropolis with a population exceeding 3 million residents. In addition to being the capital city of the federal government, it is also a center of manufacturing industries, trade, investment, tourism, international transport and other services.
Due to this, the vast majority of its residents require a reliable means of transportation to commute to and from home and workplaces, among others. So far, the city administration has provided all the necessary transportation means like light rail, city bus, minibus taxis, meter taxis, as well as mobile app-operated ride-hailing services.
Yet the major transportation hubs of the city are observed congested with commuters waiting in lines for up to an hour to get on board a bus or line taxis.
Almost a thousand buses and ten thousand line taxis are deployed in the city daily to lift the millions of urban passengers in the city. While the adequacy of the number of vehicles could be arguable, that could not necessarily be the only reason for delay and hustling service.
A study report published by Shega Media and Technology PLC indicates that digitalizing the transport fare collection system could contribute immensely to addressing the transportation service trouble of the city.
The report indicates that many of the transport service providers collect their payment in cash, which poses many problems for both the service providers and users. According to the report, the prevalent Cash dependency causes delays, increases the risk of theft for the user and service providers as well, and passengers often struggle with obtaining exact change quickly, leading to further inefficiencies in daily operations.
For instance, in any given station where a hundred people have stood in line, it is the cashier who receives money and dispenses the ticket to the passenger for the trip. While the cashier’s efficiency determines the speed of collecting the cash and allowing the passengers in, the users could also affect the smooth process of onboarding the bus, simply because they are using cash to pay.
Most of the time, people may not carry the exact amount of money for the fare. So they may give bigger notes, like a hundred or two hundred and wait for a change. This will take the cashier to look for the change from her cash box, count it, check it and return to the passenger along with the ticket. It is easy to imagine during that rush hour how much the fractions of a second wasted on receiving and returning cash could take for the hundreds of passengers waiting in that same line.
Furthermore, with such a large number of city bus users, cash payment is highly vulnerable to various forms of fraudulent activities. For instance, the Addis Ababa City Bus Administration had to issue bus tickets with QR code labels to avoid the possible use of counterfeit tickets both by the cashiers and some passengers. This entails the tendency that the transport service providers have sensed the loss incurred by the use of counterfeit tickets.
The study report pinpoints another drawback that cash payments do not provide suitable real-time data for the service provider, based on which they can optimize the system and plan their future service delivery.
Cash handling can also raise health concerns, be easily lost or shattered during the jostling of the massive commuters who are in a hurry to get on board the bus, the study report elaborates.
However, digitalization of the fare collection could significantly mitigate the wastage of time, money and suffering of the passengers. The digitalization of the payment cannot be considered difficult, as all that is needed is to end the use of cash, and the ticket system is available in the country, the report highlights.
Ethiopia has streamlined its digital economy through the Digital Ethiopia Strategy 2025 (DES 25), which helped boost, among other things, the digital financial services and instant payment system in the country.
Accordingly, almost all of the banks and the majority of the microfinancial institutions have launched mobile banking services and integrated themselves into the national switch system, which makes their service interoperable.
On top of that, many of them have also launched mobile money services, while other fintechs have embarked on instant payment systems and digital finance services.
The DES 25 indicates that the number of digital payment service users in the country has also reached 128 million, with an inactive rate of 28 %. The statistics also indicate that the number of digital finance accounts in the country has exceeded 200 million, as registered by various providers, indicating the possibility of a smooth digital payment for transportation services.
Therefore, according to Shega’s study report, the major remaining work is integrating the urban transport payment system with the already operational digital payment platforms that are interoperable.
The study suggests that the transport fare can use Near Field Communication (NFC), which is a contact-less payment technology that enables secure transactions between devices, such as smartphones, smart cards, or wearables and NFC-enabled payment terminals.
It allows users to make quick and convenient payments by simply tapping or bringing their device close to a terminal, without the need for physical contact. In public transport, NFC payments streamline fare collection, reducing reliance on cash, improving transaction efficiency, and enhancing commuter convenience. Integrating QR code-based payments is another option for digital fare systems.
In this method, a passenger scans a QR code displayed in a bus or train station. This QR code is linked to banking and mobile money systems, allowing the user to instantly pay their fare. QR code payments are popular because they are low cost to implement, do not require specialized hardware (as smartphones and printed codes suffice), and are accessible to a wide range of users, even those without NFC-enabled devices, the study elaborates.
In addition to providing a simple and reliable fare collection system to the service providers, digital payment can also save the time of both parties. Transport service providers can also trace their frequent users so that they can attract more people by providing incentives like discounts and other rewards. This way, the administration can also encourage more people to use public transport rather than private vehicles that congest roads.
BY ZEKARIAS WOLDEMARIAM
THE ETHIOPIAN HERALD TUESDAY 22 July 2025
