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Use card and cash

Dr Neelesh Gounder
Monday, October 09, 2017

The compulsory implementation of electronic bus ticketing finally came into effect on October 1. While it is a good initiative from some perspectives, it has also generated strong dissatisfaction from consumers. Bus commuters and others have been speaking their minds across social media.

The first two days after the implementation mainly focused on technical setbacks. These are not rare and happen almost everywhere. However, a dimension of discussion that has been mostly missing is the consumer. Where is the consumer in this story?

Consumer freedom

Notes and coins issued by the Reserve Bank of Fiji are a public good. They are the only legal tender. As a result, there should be no obligation to accept electronic ticketing for a basic service such as transportation.

The ability to use cash is about consumer freedom.

Cash as a payment option ensures consumers have a choice regarding payment for consumption.

Forcing consumers to make a payment on the payment solutions of another business which is not party to the exchange is consumer coercion. In this case, the consumers are being forced to pay a bus fare on a payment solution by a mobile phone company when the transaction is between a bus company and the passenger.

A consumer's choice of payment mode generally depends on a number of factors such as type and variability of household incomes, personal convenience, other daily commitments, etc.

Vodafone has a recharge card option with the value of $2. There is a good reason for demand for such a value. Not all consumers at all times would have more than $2 cash with them to recharge.

This decision to recharge for $2 is clearly linked to incomes. For this reason, it is important to understand the lives of the low-income households. There is a reason corner shops still see consumers buying few potatoes and onions on a daily basis. This may not make any sense to an affluent bystander but that is how the poor manage their income and expenditure.

Despite the advent of new payment instruments, which no doubt look evolutionary, cash as a means of payment remains primarily for very small purchases. Blaming consumers for habit persistence does not make consumer behaviour wrong.

Providing both options give consumers, low-income households in particular, freedom within the limits of their income and other commitments on a daily basis.

Certain level

of inconvenience

There is certainly a level of inconvenience regarding putting money in the card. Cash is easy and convenient to use. For low income households this could mean a few times in a week. The lack of cash option thus creates a sense of helplessness in the daily routine. Even small changes such as committing a whole $10 on Monday can distort daily spending routine of low-income households.

Keeping cash is tangible. It allows to better control the budget for those who have difficulties to make ends meet.

However, there also seems to be a disturbing mood. Consumers are also genuinely graved because choice has been restricted. The freedom to choose has a value. It is an expressive value because it allows consumers the freedom to juggle small payments the way it best works for them.

This expressive value arises from the fact that it empowers the consumer to assert his or her independence and free will.

Electronic ticketing is something which should have made life easier. When it does not, people will get frustrated.

If you have some coins with you, pay it to the driver and board the bus. However, if you are forced to put those coins into an electronic card in a nearby shop and then use the cards to swipe at a machine to board the bus, something seems pointless for many consumers.

With cash, if you are overcharged, you can immediately get it back from the driver. People do not want the inconvenience of going to somewhere else to get the overcharged amount. Notes and coins therefore are a powerful practical construct. Money is powerful because it allows strangers to co-operate conveniently which allows efficiency.

That is why even the world's best developed systems continue to use cash payment as the first best option for sheer reasons of practicability.

'Ideal solution'

The ideal solution would have been to keep both options but charge a slightly higher fare for the cash option to incentivise the use of electronic ticketing. This will allow consumers to opt to continue paying cash.

If electronic ticketing is so good, all consumers would be using in the not too distant future.

By reducing consumer choice to electronic ticketing only, we are creating an environment to enslave consumers.

* These are the author's views and not of The Fiji Times or of USP where he is employed.

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