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Visa collaborating with government on online payment services: Visa’s general manager

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Daily News Egypt interviews the General Manager of Visa in the North and Francophone Africa region Tarek Elhousseiny

Tarek Elhousseiny, General Manager of Visa in the MENA region

Tarek Elhousseiny, General Manager of Visa in the North and Francophone Africa region

Visa is currently working to launch new online payment services in the Egyptian market “very soon”, according to Tarek Elhousseiny, general manager of Visa in the North and Francophone Africa.

In an interview with the Daily News Egypt, Elhousseiny said that within the coming months, Visa will offer online payment services for customs, taxes and utilities. The general manager stated that the investment in the technology to bring these services was “huge”, as several partners have invested, including the government, Visa, E-financing operations, and banks.

What are the current investments of Visa Egypt?

We make a lot of investments in the technology sector … [particularly] in payments. One of them is CyberSource. It allows consumers to go online and make any purchases in a very safe environment with a monitor for fraud. Consumers will have the sense that their payment data, such as card data, is very safe from hacking and so on. This technology is brought to financial institutions, which facilitates the payment service for merchants to the end user. Hundreds of millions of dollars were invested to make this technology available to financial institutions, who want to make it available for their customers. The very first merchant and service provider that we are offering this service to, very soon, is the government. [With it,] you can pay for certain government services such as utility bills, licenses and other. You can go online to ask to renew your passport or identification card, then it’s delivered to your door and you can pay cash.  This is going to allow you to go online and do everything there.

We will also bring a host of other services and we’re doing a lot of business with the Ministry of Communication and Information Technology to see how best we can expedite the growth of e-commerce, online payment. We are looking at the entire eco-system that will be friendlier to small and medium enterprises (SMEs) and make consumers more comfortable with using their payment tools online while their rights are well protected for returning these products and guarantees and so on.

We’re also investing in the space of acceptance – the number of merchants who accept card payments – and working with our global partners to bring mobile payments to the market.

Egypt’s National Postal Organization recently launched its new Visa Card Services. Can you give us further details on these services? What was the aim of the collaboration?

The post caters to what is equivalent to twice the volume as the banking system. The banking system has approximately between 10 and 12 million accounts, and we are talking about penetration to a much larger number of consumers. The postal system has more than 2,000 offices, reaching into other segments. If we divide society to socio-economic groups of A, B, C and D all the way to F and even below F, we’ll find that they cater to the Bs and Cs and Ds. They are deeply rooted in to the Cs and Ds. The importance of the engagement with the post is not so much the project itself but the importance is the offering of the products to the segments that are lie below the banked populations.

We have the “banked” population and the “unbanked”, which is the majority, and what I call the “un-bankable”.  The unbanked, those who the post reaches out to, is the segment that this initiative addresses.

We’re launching with them four prepaid products such as gift cards, student cards, and family cards and so on. The student card for example is the student card, which is in cooperation with international student run organisation Aiesec, offers various services such as discount transportation and books as well as libraries access.

What was the success rate of these products? And will they experience any more updates?

The [consumption] of these products was encouraging because it was in tens of thousands of cards. It was very, very appealing from that perspective. But like anything else, the launch saw big success then went down to normal levels. The products were a success and pre-paid is not big in Egypt, so they are [the products] very seriously playing in that space.

What other new products and services are expected in Egypt the coming year?

We are also going to launch a number of other products with the postal authority by the end of this calendar year and during the following year. S that surprised us as well [about the post is that] there are big segments and customers that have balances above the EGP 1m. It was an opening for us. Meanwhile, there are people that have EGP 2,000 balances in their accounts. The post has to provide services for all of them and therefore they’re currently segmenting their consumer base to understand their income, lifestyle and requirements in order to study the issuing of new products that appeals to them.

Our clients are mainly financial institutions. Over the last two or three months there were a number of products offered but for very different segments. The premium segment in general was an important segment for banks, and so we provided a number of products for that segment. We’ve launched a number of FIFA products and then we also launched several premium, credit and debit products with Commercial International Bank (CIB).

Have there been any contractions in the business of Visa in Egypt as a result of the shifts the market has witnessed?

The contraction witnessed was in the cross-border inbound business – the tourists. That was a remarkable contraction. It was very reflective of what happened to the entire destination, and we [operate] as a [tourist] destination. If we were running at 80% hotel occupancy during this period, and then the average hotel occupancy dropped below the 30s [percentage], this would be seen as a significant contraction. If the destination’s deluxe room rate was running at $180-$190 a night and it is now running at $90, this is a contraction. If the number declines, our numbers will decline accordingly. Consumer spending domestically has not witnessed the same contraction, however.

What was Visa’s market share growth rate during that period? Do you expect it to increase during the coming years?

Generally, we grew by low double digit numbers. Most of the growth was coming from the domestic market. There was a good chunk coming from the international market but most of it was from the domestic market. We are not growing by 20%-25% as we used to but there is a growth in the number of cards and the volumes, those two dimensions. Cross-border, the Egyptian spending abroad also increased. It was not very significant but it was still a low double digit growth. We grew overall; everything lumped in, at about 12%. This is much less than the growth experienced in previous years, so that’s the contraction. Going back to your previous question, the contraction was in the amount growth; not falling into negative [growth].

Future growth depends on the environment. I think everything tends to point to the fact that the company [can expect] more stability than it did during the past three years. If this happens, and I personally believe it will happen, we’ll go back to normal growth rates that we’re used to. This will be across all industries with different speeds. I think the very first impactful industry that will start the wheel is tourism, because it touches a number of other sectors. The expectation is that it will be higher than this year.

What is Visa Egypt’s target profit during the FY 2013/2014 year?

We don’t announce our profits but the global company released the last quarter’s financial statement. I think the profit is not the objective but the increase of penetration of electronic payments.

During the first quarter of 2014, the global company registered $1.4bn, a 9% increase compared to the previous year.


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