East Africa is set for a major rise in cashless transactions by the end of this year.

Equity Bank’s partnerships with MasterCard and Google to introduce the near field communication (NFC) technology that uses chips and applications in mobile phones, is expected to boost such transactions that offer consumers convenience when paying for goods and services.

It will also help Kenya’s largest bank in terms of depositors cut costs incurred in the handling of cash.

Equity Bank Group chief executive officer James Mwangi, announced the deal with MasterCard at the release of the company’s first quarter results last week.

“Consumers can now make mobile payments on an affordable device plus kiosks accept MasterCard, not on swipe but on tap using NFC technology,” said Mr Mwangi.

Consumers using the NFC technology tap or wave their mobile phones at a reader to make payments and the transaction is processed in real time.

Equity Bank introduced its BebaPay payment card that also uses NFC technology at the end of last month. The BebaPay card, a partnership with Google, targets commuters.

“Tap and go is the next frontier for investors and regional governments as they digitise businesses,” said Joseph Mucheru, Google’s country manager.

Mr Mwangi said in cash-heavy economies such as those in East Africa, plastic money would cut the cost of doing business as it eliminates the use of cashiers. Said he: “As soon as we can automate payments in matatus, kiosks, restaurants and retail shops, costs will come down significantly.”

As at the end of last year, there were 10.7 million cards in circulation in Kenya and 30.7 million mobile phone subscribers.

Central Bank of Kenya data shows the value of card transactions rose by 74.74 per cent to Ksh1.009 trillion ($11.74 billion) in the 12 months ended December last year, compared with Ksh577.85 billion ($6.71 billion) transacted for the period ended December 2011.

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The value of transactions through mobile phones hit Ksh1.54 trillion ($17.96 billion), a 32.13 per cent rise from Ksh1.16 trillion ($13.59 billion) within the same period.

The largest operator in Kenya in the mobile payments space is Safaricom, through its M-Pesa platform. Others are Airtel, Essar and Telekom Kenya through their Airtel Money, YuCash and Orange Money brands. Tangaza and MobiKash also operate mobile money services, although they do not offer voice services.

In Uganda, users on the mobile money transfer system grew to 8.9 million at the close of 2012 from 2.9 million in 2011, pushing such accounts past the 4.9 million mark, according to Charles Abuka, director of financial stability at the Bank of Uganda.

Dr Abuka said the number of mobile money transactions rose to 242 million at the end of 2012 from 87.5 million in 2011 and the value of the transactions grew from Ush3.8 trillion ($1.46 billion) to Ush11.7 trillion ($4.5 billion). All the five major mobile operators in Uganda have money transfer platforms — MTN Mobile Money (MTN), Waridpesa (Warid), Airtel Money (Airtel), Msente (UTL) and Orange Money (Orange).

The National Bank of Rwanda in its first monetary policy statement for 2013 said as at the end of last year, the value of transactions using international visa cards was in excess of $3 million, buoyed by the popularity of mobile payments and e-banking.