Cash has long reigned supreme in the Algerian marketplace. While businesses in the formal sector make use of cheques and bank transfers, most Algerians exclusively use cash for their day-to-day spending and household purchases – a status quo the government aims to change through a series of initiatives. “Algeria is working hard to reduce the informal sector, through measures such as requiring check payments for large transactions, although card payment would help this even further,” Société d’automatisation des Transactions Interbancaires et de la Monétique (SATIM), general manager Newel Benkritly told OBG.
ATM machines and bank cards first appeared in Algeria in 1997 following the establishment of the Société d’Automatisation des Transactions Interbancaires et de Monétique, a subsidiary of eight banks charged with installing the electronic payments infrastructure. In mid-2015 that network boasted nearly 1.5m debit cards, issued by both public and private banks and accepted at 2000 ATMs and 3000 point-ofsale (POS) terminals. Only 120 of Algeria’s terminals actually saw transactions in the first half of 2015, as most customers use bank cards exclusively for ATM withdrawals rather than direct payment. However, frequent service interruptions have even discouraged reliance on ATMs as a primary cash source.
In June 2014, Algeria’s banks, led by the Association of Banks and Financial Institutions (Association des Banques et Établissements Financières, ABEF), collectively established the Economic Interest Group (Groupe d’Intérêt Economique de Monétique, GIE) to actively promote the adoption of electronic payments, primarily through the development and implementation of technical standards and regulations, compliance certification and public promotional campaigns. “Today the importance of electronic payments no longer constitutes a source of doubt,” GIE director-general Mouatassem Boudiaf told OBG. “There is a real dedication by the banks, supported by the country’s public authorities, to promote electronic payments,” he added.
Obstacles
According to Boudiaf a lack of information and, more critically, of confidence on the part of users historically limited participation in e-payment initiatives, which meant that the new system had to ensure complete functionality to win over clients. “The network must be fully functional; we have a no tolerance policy for breakdowns. We also need interactive communication channels. When the customer has a failed transaction they need to be able to reach their bank and understand why,” Boudiaf told OBG. Problems also exist on the merchant side, where high staff turnover complicates efforts to train staff in processing electronic payments. GIE is preparing a major public awareness campaign for 2016 to boost consumer confidence and is also developing online training modules for retail staff.
An information campaign will educate merchants on the advantages that electronic payments present over cash, including less investment of time and human resources, and lowered security risks. Terminal transactions under an AD2000 (€18.40) threshold are currently charged AD3 (€0.03), and those above the threshold AD6 (€0.06). Online transactions will cost AD10 (€0.09) under the AD2000 (€18.40) threshold and up to AD300 (€2.76) above it, charges that Boudiaf described to El Watan newspaper as “reasonable, realistic and accepted by the merchants”.
E-Future
The banking industry hopes to see 25,000 POS terminals operating by the end of 2016, and it is working to encourage state-owned utilities, airlines and mobile operators to install terminals and boost electronic transactions. In preparation for this growth, banks are upgrading payment processing systems and readying new electronic payment products to complement existing bank cards. 2016 should see Algeria’s first corporate cards issued and the early development of online commerce programmes.
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