Project News

Accelerating e-mobility adoption with flexible micro-payments for energy: lessons from Ecobodaa’s trial of their digital payment platform in Kenya
Image of mechanics working on e-motorbike

With over 1.3 million motorcycle taxis operating in Kenya, there is significant potential to replace combustion engine motorcycles with zero-emission e-vehicles. Ecobodaa, a Kenyan start-up, aims to achieve this vision by introducing locally designed and assembled electric motorcycles, reducing emissions and enhancing air quality.

In 2020, the company conducted a trial with 10 electric motorcycles, covering over 150,000 km to gather valuable user feedback for product improvement. A key finding was that many riders, with an average daily income of USD $2.70, are reluctant and unable to make full upfront payments for battery swaps. In response, Ecobodaa developed a digital platform that supports micro pay-as-you-go (PAYGO) energy purchases. Through this system, any remaining power in the batteries at the time of swapping is converted to a financial value that can be carried forward by the user, so no money is lost at the battery swap stage. This model closely mirrors the petrol payment experience and provides taxi drivers with greater autonomy over cash flow management.

In October 2022, Ecobodaa received a grant from PREO to expand its electric motorcycle fleet by 50 units across the Nairobi metropolitan area, whilst commercialising its PAYGO technology. In addition to fostering socio-economic growth in the local community by supporting driver livelihoods and economic opportunities, the project also sought to significantly reduce pollution levels and enhance urban air quality in the local environment.

Following the project’s completion in 2023, PREO interviewed Ecobodaa co-founders, Kim Chepkoit and Stephen Juma, alongside Ecobodaa staff and riders, to gain valuable insights and lessons learned for the wider e-mobility sector.

Q. What were your initial goals for your PREO-funded project and were they achieved?

A. At the outset of our PREO-funded project, we wanted to validate and demonstrate three aspects of our business model:

  • The viability of digital micropayments for accelerating e-mobility adoption. The trial showed that 95% of transactions were for values less than the price of a fully charged battery (note that we dropped the cost from $1.80 to $1.25 in July 2023 to increase our competitiveness). This confirms that most riders cannot afford to pay for a fully charged battery upfront. In fact, 80% of power purchases were for less than $0.63 which is under the threshold for attracting mobile money transaction charges.
  • The possibility of reducing range anxiety with a dual battery system. Range anxiety refers to the worry of EV drivers about whether their battery charge is adequate to complete a journey, and we addressed this from the outset with a dual battery system. Our experience during the vastly expanded PREO-funded trial validated our findings that two batteries allowed drivers to cover at least 140km on a single battery, which is comfortably in excess of the 120km that a driver covers each day in Nairobi on average. 
  • The switch to digital payments to reduce revenue leakage and improve financial management. After developing our payment platform called Safiri, all power payments are received into our mobile money wallet. Digitalisation subsequently eliminated the 10% revenue leakage that we saw during our initial pilot in which cash transactions were handled by swap station attendants. It also allowed us to log each transaction which made it easier to report on revenue.

Q. How was your Safiri payment platform different to your previous payment solution? What challenges did you facing in operating and scaling it?

A. Before introducing the Safiri platform, we only allowed upfront cash payments for a fully charged battery at the swap station. In this system, when drivers returned batteries that were not fully depleted, they lost the value of the remaining energy, which had a negative impact on customer satisfaction.  However, because many drivers could not afford the full amount, we decided to adapt our strategy to meet their needs. So, we offered them a battery on ‘credit’ at the start of the day which they then repaid after earning enough income that day. Without a suitable platform in place, such ‘batteries credits’ were tracked manually, which led to occasional maladministration and subsequent financial loss.

With Safiri, riders could swap in a fully charged battery without paying for it upfront and then progressively unlock it through micro-payments for energy through a mobile money application on their phones. However, the rollout of the Safiri platform encountered some bumps in the road. The devices hosting the platform used special Internet of Things (IoT) SIMs sourced from Safaricom, which we found difficult to configure.  As the devices use Global System for Mobile (GSM) communication technology, if drivers purchased energy in a location with a weak signal, they often had to make several attempts to activate purchased units of energy, which detracted from their user experience.  Our reliance on Safaricom as our only payment aggregator causes occasional knock-on problems with processing payment requests when they experience technical issues. 

As for challenges in customer services, some drivers had the perception that they got more range when they purchased a fully charged battery upfront, compared to when they made micro-purchases. We addressed these concerns by testing the two scenarios with the affected drivers, with results indicating no difference in distance covered.

Q. Are custom payment platforms feasible from a technical and financial standpoint? What would you recommend to peers seeking to solve similar payment-related problems?

A. Custom payment platforms are not only feasible but also necessary, as existing proprietary software on the market is tailored for off-grid solar home systems solutions in Africa rather than electric two-wheelers. However, such platforms require in-house technical expertise to build, which may be expensive at first due to the high human resource costs for research and design. The initial investment can be recouped over the long-term if the business scales significantly.

Before venturing into the development of custom solutions, however, the business should consider the following questions:

  • What is their business model now and what will it look like in the future?
  • What problem is the business addressing with the software and are there any existing solutions?
  • Is the solution future-proofed?
  • Is it solving a problem for the riders or the business (or both?) What value does it deliver?
  • What is the long-term outlook for the business and which part of the value-chain do they want to specialise in as the market develops?

Without a clear answer to all of these questions, the company will not be in a position to make a sound assessment of the risks and rewards of investing in a custom solution. 

Q. What have been the benefits for Ecobodaa customers in terms of savings and convenience?

A. Safiri has delivered four benefits to the riders:

  • Cash flow management. As the riders can unlock a portion of the battery’s energy through micro-payments, it has the same advantage as fuelling with petrol: drivers can refuel after being paid by a client.
  • Purchase energy from anywhere. With mobile money enabled micro-payments, the rider can purchase energy from anywhere instead of solely at the swap station.
  • Save on mobile money transactions cost. Drivers can take advantage of the fact that transactions of value under $0.63 do not attract any charges from the mobile money provider.
  • Eradicate loss of residual energy. Safiri efficiently automates the transfer of ‘residual’ paid-for-energy from one battery to another during the swap.

Q. How has the deployment of Safiri affected Ecobodaa economics?

A. The motorcycle CAPEX increases by $40 per unit due to addition of the IoT module. It also has recurrent costs because we need to pay for the server, USSD code, developers and IoT SIMS data. Such additional costs are quickly offset by the scalability of micro payments model. Moreover, this cost is not just for powering micro-payments because other parts of the business also use these resources, such as lease repayments.

Q. What are Ecobodaa’s plans for the future? How do you expect e-mobility payment platforms to evolve in Africa and for Ecobodaa?

A. We aim to scale our solution by deploying more than 500 bikes powered by Safiri in 2024. We also plan to open Safiri as a B2B/software-as-a-service solution for other African players, some of whom have already expressed an interest. So, we are currently improving both the hardware and software components of Safiri to serve this market niche.

As for the evolution in payment platforms, we anticipate that motorcycle financiers will increase their portfolio of financed electric bikes from 2024. For this to scale faster, the suppliers and manufacturers must offer lease repayments solutions or asset security. This will ensure that financiers are able to recoup their investment on time. In battery-as-a-service (BaaS) models, the energy segment of the value-chain may be completely decoupled from the bikes, which may be supplied by independent providers. For this to scale, BaaS providers need to offer a software solution that is robust and dynamic enough to implement different billing methods for maximum revenue collection.