CAIRO: The use of payment cards in Egypt is rising as well as demand from consumers for access to them, Visa executives said Tuesday at a conference. The expansion of payment cards, however, is hindered by a lack of understanding and awareness about their benefits and unsubstantiated fears of them held by small merchants, as well as inadequate infrastructure at point-of-sales (POS) and low quality ATMs, concluded a Visa survey. “Based on the survey results, we can see more and more Egyptians using their payment cards for direct payment rather than just withdrawing cash from an ATM,” Tarek Elhousseiny, general manager for North and West Africa at Visa, said. According to Visa, this is a direct reflection of a shift in Egyptian culture and habits, which is moving the trend toward a cashless society. The survey conducted by Visa, which relied on the answers provided by 766 Egyptians aged 25-45 from various economic backgrounds, concluded that “73 percent of cardholders use their payment cards at least once every two weeks.” The Visa study revealed that “there are about 10 million cardholders in Egypt, of which, as of October 2009, 5 million are Visa cards,” explained Elhousseiny. Furthermore it was noted that ATM expansion has been progressing at a healthy rate: between 2004-2009 the number of ATMs increased from 4,000-15,000; and during that same time span, the number of point-of-sales (POS) increased from 10,000-38,000. Notwithstanding these figures, impasses remain to be tackled which are limiting payment cards' expansion and a cashless culture that Visa and other payment card companies yearns for. Indeed, as the survey stressed, 69 percent of respondents stressed that a lack of POS machines was a main concern. To this effect, one of the critical problems facing payment card companies is a lack of awareness about the benefits and a general mistrust of payment cards on the part of small merchants, which hinders acceptance of POSs in their shops. “Certain merchants discourage payment card use,” Elhousseiny said. He explained that one popular misconception is that merchants believe they will have to wait a week or more to receive their payment from Visa for goods purchased by customers. Elhousseiny refuted this claim, indicating that all merchants receive payment from Visa within 24 hours. To surmount this pervasive misperception, Visa has engaged in an awareness campaign — about four to five per year in fact — to build and solidify trust and sweep away fears about the pitfalls of payment card usage amongst merchants. Lack of ATM efficiency — meaning ATMs working improperly — was noted as another problem in Egypt. Even though their numbers have increased, Visa expressed slight concern over a lower than desired efficiency rate of ATM machines, which they estimated to be near to 70 percent. To correct the shortfalls in infrastructure, “Visa member banks have put significant resources and investments into infrastructure in order to make electronic payments a convenient payment tool,” ElHousseiny said. Moreover, Elhousseiny stated that Visa was working hand-in-hand with the government to facilitate the establishment of needed infrastructure. It was also highlighted that many people, especially those that are working-class individuals, spend less than the often minimum LE 50 required to use a payment card, thereby making their use cumbersome. Although this obstacle has its validity, Elhousseiny acknowledged, he riposted that payment cards could be used in many circumstances in Egypt that would facilitate life for its users, which is currently not the case. “Today, payments made at gas stations, for insurance purposes, utility bills as well as at pharmacies for instance, often require more significant sums of money; in this case having a payment card would facilitate not just the consumers' lives, but also that of the actors involved in the cash cycle, as it takes 14 days to complete when cash is involved in contrast to electronic payment, thus making it faster and more efficient,” Elhousseiny indicated. Service fees are regarded as another challenge to promoting payment card use. Nevertheless, Elhousseiny said that this issue, although having merit, should be “corrected by the market itself, once more competitors enters the playing field.” Elhousseiny believes that a culture of relying on payment cards will be fostered by the rapid uptake of internet connectivity, in particular with much of the drive stemming from the youth segment of the population. To accelerate financial literacy and augment acceptance of payment cards, Visa launched a website, which can be accessed at: www.mymoneyskills.me.
