A cultural adherence to using cash is the most prominent challenge facing the popularity of electronic payment cards in Egypt, said General Manager for North and West Africa at Visa Tarek El-Husseini.
Currently, the use of electronic payments accounts for no more than 2% of consumer spending in Egypt.
To counter this, El-Husseini says that the infrastructure in the Egyptian market must be strengthened to create more awareness and acceptance of electronic payment cards.
Visa makes up 61.5% of the electronic payment cards market in Egypt and worldwide. The company intends to launch its mVisa service in Egypt soon to significantly expand electronic payments in the country.
Visa signed a memorandum of understanding (MoU) with the Ministry of Supply and Domestic Trade and the Ministry of Planning to study the present subsidies system and propose an action plan to modernise it. The company is cooperating with the National Bank of Egypt and Banque Misr in issuing government payroll cards.
How many banks is Visa cooperating with in Egypt?
We are cooperating with all banks operating in the Egyptian market that are willing to develop digital payments. We are constantly working to strengthen this partnership with the banks, in order to provide new payment products and services enabling multiple payment options for all segments of society.
How many Visa cards are currently in the Egyptian market? How many cards are targeted for 2016?
According to the Nielsen Corporation, a global marketing research firm, the market share of Visa is estimated at 61.5% globally, and this does not differ in Egypt.
I believe that the number of Visa cards in the Egyptian market will increase this year, in the framework of our efforts to issue government payroll cards.
We should always look at the number of cards that are actually in use rather than the number of cards that were issued. The basic indicator relies on the spread of the culture of electronic payments.
The issuance of the cards is, of course, important, but using them for purchasing products and services on a daily basis is more important, especially in a society like Egypt. Here, the spread rate of mobile phones exceeds 100% and that of smart phones exceeds 40%.
The mVisa service, scheduled to be launched soon in Egypt, is primarily designed to spread electronic payments.
How are electronic payment cards doing in Egypt?
Use of electronic payment cards is growing steadily in Egypt, especially as the current government is working to improve the efficiency of public services provided to citizens by allowing electronic payment services, such as the new payroll cards.
Visa recently signed an MoU with the Ministry of Supply and Internal Trade and the Ministry of Planning to study the current subsidy system and propose its development plan.
Egyptian banks contribute to the technical support for these cards to offer multiple options for citizens who benefit from the subsidy service.
What do you think the impact of this step will be on the state’s plan to spread financial inclusion?
I would like to emphasise that our continued cooperation with the banks, alongside the government’s steps towards the spread of electronic payments, will support the state’s efforts to spread financial inclusion.
We need the cooperation of all parties to increase electronic payments and its positive impact on the individual and on the economy. Electronic payments save time and effort, provide security measures and enable individuals to buy products and services smoothly. In addition, electronic payments offer many promotions and discounts for customers.
Visa commissioned a study by Moody’s Investors Service. The study analysed the impact of electronic payments on economic growth in 70 countries from 2011 and 2015.
The study revealed that the growing use of electronic payment products—including credit, debit, and prepaid cards—has added $296bn to the GDP of these countries.
It also revealed that electronic payments added about $10m to Egypt’s GDP from 2011 to 2015, and provided about 2,300 jobs annually in the same period.
What is the role of the company in the project to automate government employees’ salaries?
The company plays a supportive role, and supports the government’s efforts to expand the scope of the electronic payments system. In cooperation with the Ministry of Finance we are preparing the road-map for electronic governmental payments.
You should know that the use of electronic payments accounts for no more than 2% of consumer spending in Egypt. Therefore, there is a huge opportunity for the deployment of electronic payments here.
We also cooperate with banks that issue government salaries cards to provide appropriate payment tools for government employees.
We are cooperating with the National Bank of Egypt (NBE) and Banque Misr to issue government payroll cards.
The point that I want to emphasise again, is that it is not only about issuing the cards or their numbers. This step requires great effort and to change spending patterns until we activate the use of payroll cards.
Awareness is very important in this project to supply employees with basic information about payroll cards.
Government employees must be educated about the payroll cards. They should know that no fees of any kind will be deducted from their salaries, and that the salary card is safe and convenient.
The card will allow employees to purchase their basic needs and pay for services without having to carry cash. In case of loss, employees will be able to obtain another card without incurring any charge. When you lose cash, you cannot get it back.
What is the role of Visa in educating government employees who will use electronic payment cards?
The company is dedicating a great deal of its resources to education and financial inclusion in order to explain the importance and benefits of electronic payments.
In the framework of the programme for governmental salaries, we have signed a protocol with the Institute of Banking for the project “Spreading the culture of the payroll payment programme”.
The project aims to educate governmental sector employees on how to use the government payroll cards to purchase goods and services, to pay bills, to pay for phone services, and other things.
The project will make state employees more aware of their cards’ capabilities, their services, bank accounts, and all electronic payments.
The goal of the first phase of the project is to reach approximately 120,000 employees in various governmental agencies.
The project relies on direct and indirect communication methods with government employees, through direct seminars and prepared training classes, in order to create an informative environment so the government employee can easily understand.
The Institute of Banking, Visa company, NBE, and Banque Misr (BM) are cooperating in the implementation of the project, in an attempt to support the government’s steps to increase reliance on electronic payments, in order to ensure the survival of the funds in the banking system for as long as possible, to decrease the size of the informal economy, and to save the effort and time related to the cash system, in addition to helping the employees to repay their pledges.
What is the role of Visa in activating the electronic payments system in Egypt?
Visa works with all partners, whether financial institutions or the government, in order to activate and spread the use of electronic payments.
Visa has a large variety of solutions and products that act as flexible tools of payment, such as prepaid cards and debit cards. They link between the cardholders, merchants and banks.
At the same time, we are working with our partners from financial institutions to broaden the use of electronic payment products.
We launched a very successful initiative to expand its usage, with a number of banks operating in Egypt, through which we launched several thousand new electronic points of sale (POS). Their rate of usage reached 72%. Moreover, we always cooperate with banks to offer new payment services and products.
In your opinion, what should the government and banks do to support the transformation to an electronic payments system in Egypt?
I do not think that the government needs any advice in this regard; it has already taken several initiatives.
As I mentioned earlier, there are serious moves by the government in Egypt to expand the range of uses of electronic payments. This is obvious in the government’s commitment to pay its staff’s salaries through more reliable payroll cards, and to enhance the efficiency of the subsidies system that affects the lives of millions of citizens.
Banks in Egypt have a great deal of awareness about the importance of moving forwards with financial inclusion efforts, and, of course, we cooperate with them in this.
However, I think that all parties must contribute to raising citizens’ awareness and strengthening the infrastructure in the Egyptian market, to create as much acceptance as possible, which meets the consumers’ daily needs. In addition, we should rely heavily on the significant spread of mobile devices in Egypt, which are used on a daily basis around the clock.
What obstacles stand in the way of this plan’s implementation?
The challenges facing the use of electronic payment cards are often related to culture, particularly the culture of cash.
In order to be able to strengthen and spread electronic payments, all parties should clarify its benefits and its positive impact on the economy in general and on citizens in particular.
We organised an educational training session for Egyptian journalists in cooperation with Al-Ahram Regional Institute for Journalism, as well as training courses sessions for partners, such as the Social Fund for Development and the awareness program associated with the government payroll cards, in addition to the efforts we do continuously with banks to achieve this goal.
We must also realise that working with electronic payments on a wider scale in Egypt will save paper.
Money can be transferred immediately instead of having to wait for the infamously slow procedures, which thus will lead to an accelerated pace of business completion, collection cycle, and liquidity ratio.
This expansion will also have a positive impact on reducing costs for the government’s implementation of several projects, as well as cash management costs.
The electronic trade processes that are related to the electronic payment system will contribute to a reduction in the volume of parallel economies.
I believe that with the accelerated economic pace of the state and by launching the projects in the Suez Canal area, the Egyptian economy will greatly improve.
Projects likes these indicate that the government is aware of the current economic problems, and that it has a sincere intention to overcome them. The government has already begun the implementation of projects that are not only national, but also contribute to the process of merging with the global economy which depends on offering services and added values.
What role is Visa playing to achieve financial inclusion in Egypt?
Financial inclusion is considered a large part of our everyday lives. It basically revolves around enabling everybody to have a bank account through financial transactions. For years, Visa has been exerting great efforts in order to push financial inclusion forward.
There are several ways to achieve this, including enhancing the efficiency of the government’s payments, making financial literacy available for consumers, expanding the acceptance base in remote areas, using market studies to help banks develop products and solutions that work with the different social segments in a large number of countries, not just in Egypt.
In Egypt, we are currently working on enabling different segments of society, such as government employees and those who receive welfare, to benefit from financial services. We are also providing them with several payment options that suit their needs, and this is the basis of financial inclusion.
We appreciate the government’s steps to support the efforts of the Central Bank of Egypt in this regard.