Interview: Khalid Elgibali
What impact is technology having on the payments industry globally?
KHALID ELGIBALI: Significant changes are taking place in the payments landscape worldwide that are positively impacting the way in which merchants accept payments for purchases, as well as how consumers interact with merchants and businesses to select and pay for goods and services. Advances in technology and the ubiquity of mobile phones are opening new realms of possibility in payments, creating safer and smarter ways to receive and make payments while broadening access to financial resources. Egypt and the MENA region at large have remained at the centre of this technology-enabled revolution sweeping the world of payments. With more than 85% of the country’s population lacking access to formal banking products and a mobile penetration rate exceeding 100%, processing payments can be the first entry point for the unbanked to engage with the banking system. Accordingly, mobile money solutions have emerged as the most suitable solution, as they rapidly open doors for Egyptians by simplifying day-to-day payments and creating financial opportunities for the country’s unbanked population.
What are the barriers to increasing card usage and cashless transactions in Egypt?
ELGIBALI: Lack of accessibility, lack of consumer awareness of the benefits of new technologies and electronic payment methods, and inadequate value proposition for merchants are typically cited among the biggest hurdles facing developing countries in transitioning towards a cashless economy. Security is a big concern for consumers as well: lack of trust is often cited as the main factor discouraging consumers from shopping online or embracing electronic payment methods. In addition, people – especially those in non-urban areas – can be resistant to change. Currently, Egypt largely remains a cash-based society, with 98% of payments in the country taking place through cash, including much of the multi-billion-dollar tourism industry, operating as cash only. It actually costs the government up to 1.5% of GDP to print, produce and deliver cash, which is expensive and inefficient, giving rise to corruption, illegal activity and potential waste. A move away from cash towards electronic payments will therefore have a positive impact on the economy. However, Egypt has taken a remarkable lead over other comparable countries – most notably through the government’s efforts to establish the country’s first interoperable mobile ecosystem with the help of the Egyptian Banks Company and Mastercard. This was only possible due to the efforts of the Central Bank of Egypt (CBE) to define mobile money rules and regulations, and insist on the concept of interoperability rather than closed systems.
The CBE recently announced a new set of mobile payment regulations, which should boost mobile payments and bring more of the unbanked population into the formal economy. The government has also signed a memorandum of understanding with Mastercard to work towards a digital ID scheme that links each citizen’s national ID to the nationwide mobile money platform, allowing 54m Egyptians to participate in the formal economy through a single, cashless programme.
How can the development of the payment ecosystem support small business growth?
ELGIBALI: Small and medium-sized enterprises benefit greatly from effective payment and collection solutions that ensure their transactions can be conducted smoothly and safely, allowing for timely and convenient payments. Merchants could accept digital payments from consumers’ mobile wallets and electronic cards by introducing mobile point-of-sale solutions. At the same time, we should think of how to make it easier for businesses to sell online; for instance, Mastercard has implemented its payment gateway system with all five major banks in Egypt that allow for online processing of transactions, simplifying and securing the process.
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