The Moroccan economy was adversely affected by the financial crisis. However, the government took preventive measures such as the establishment of a Strategic Monitoring Committee (CVS) in February 2009 to assist the government in coping with the impact of the crisis.
Domestic demand for goods and services, driven by a stimulating fiscal policy and the protection of purchasing power, helped to sustain non-agricultural activities and played a key role as an engine of growth for Morocco’s cards and payments industry between 2009 and 2013.
In 2013, check payments and credit transfers were the most popular payment instruments, having a combined industry share of 97.3% in terms of transaction value, while the share of payment cards increased from 0.4% in 2009 to 0.9% by the end of 2013.
The share of payment cards is rising as the government and banks promote awareness levels and associated benefits among consumers and merchants.
Robust growth for payment cards registered
Through its financial inclusion program the government is aiming to bring the unbanked population into the formal banking system and is encouraging consumers to use electronic payment methods more frequently.
The adoption of Europay, MasterCard and Visa (EMV) standards and growth in e-commerce and retail industries also supported the industry’s growth. Additionally, the approval of the new draft bill for Islamic banking is anticipated to encourage banks and card issuers to introduce new products in the market.
In terms of the number of cards in circulation, Moroccan payment cards (including debit, credit and charge cards) registered positive growth at a compound annual growth rate (CAGR) of 14.31%, rising from 6.2 million in 2009 to 10.6 million in 2013.
In terms of transaction value, payment cards valued to MAD184.9bn ($22.0bn) in 2013, registering a CAGR of 14.76%.
In 2013, the average transaction value (ATV) in Morocco was $94.3 – the lowest among its peer countries. Kuwait recorded the highest ATV with $319.6, followed by Oman ($207.4), Bahrain ($185.3) and Turkey ($97.6).
Similarly, in terms of card penetration, Morocco recorded 0.33 cards per inhabitant in 2013, while Turkey recorded 1.95; Kuwait registered 1.32, Oman 1.03 and Bahrain, which constituted 0.80. In terms of frequency of use, Morocco recorded 21.8 transactions per card in 2013, while Kuwait registered 47.4, Turkey constituted 27.0, and Bahrain and Oman recorded 15.6 and 13.4 respectively.
Debit cards continue to be a favourite
In terms of transaction value, debit cards remained the most popular payment card.
The Moroccan population is dominated by a Muslim population who generally avoid credit cards for religious reasons.
Consequently, the debit cards market registered growth in terms of volume and transaction value between 2009 and 2013.
In order to spur card sales, banks and card issuers are offering EMV-compliant cards and bespoke products to meet specific customer needs.
NFC and its potential
In September 2011, M2M Group, an electronic transactions processing solutions provider, installed a contactless ticketing system in the Casablanca tram system. This NFC contactless technology enabled the processing of payments by installing VeriFone devices in 48 stations. It integrated its ticketing system with 200 vending machines and POS terminals into a single platform.
Furthermore, in January 2014, M2M Group awarded a contract to ASK, a company dealing in the manufacture and marketing of contactless cards, tickets, RFID tags, inlays, readers and couplers for public transport, to supply contactless cards for Casablanca’s new bus network.
Mobile payments are gaining prominence in Morocco
Mobile payments are gaining prominence in Morocco as they offer users a greater level of convenience. Some of the mobile payment solutions offered in Morocco are:
- Maroc Telecom collaborated with mobile financial solutions provider Comviva to introduce the Mobicash mobile debit payment service in 2010. This service enables Maroc Telecom to offer subscribers a number of services such as bill payment, mobile banking, international remittance and money transfer platforms.
- Subscribers are offered this service without opening a bank account and can be activated simply by registering themselves with Maroc Telecom agencies. International money transfers through mobile phones are anticipated to rise, which will facilitate more banking transactions.
- In 2012, Mopay, a leading payment solutions provider for online merchants, implemented an initiative in 15 Middle East and North Africa (MENA) countries including Morocco, to facilitate mobile payments. The solutions enable consumers to make transactions directly to merchants through mobile and land-line accounts, resulting in a convenient and secure payment system.
- BMCE Bank offers mobile banking solutions to their customers in collaboration with Maroc Telecom. Under the bank’s Librity service, customers are able to book travel tickets online, receive information about their credit accounts and access real-time information about the stock exchange.
Approval for Islamic banking offers growth prospects
In June 2014, the Moroccan government approved a new banking law relating to establishing a fully fledged Islamic finance industry after years of false starts. The draft bill will allow both domestic and foreign banking companies to establish Islamic banking branches in Morocco.
The new bill, which also contains legislation pertaining to the establishment of a sharia committee formed in coordination with the central bank, will help build a robust regulatory environment for the financial sector.
Presently, Attijariwafa Bank, which is part-owned by Moroccan King Mohammed VI’s holding company Société Nationale d’Investissement, has an Islamic banking subsidiary.
Anticipating the approval of the new banking law, other banks such as Banque Marocaine du Commerce Extérieur (BMCE Bank) and Banque Centrale Populaire du Maroc (BCP), have equipped themselves to set up new banking branches adhering to Islamic standards.
A recent joint study by Thomson Reuters and the Islamic Finance Consultant showed a 98% demand for Islamic finance products among the country’s largely untapped market of 30.0 million Muslim residents. The study estimated Islamic banks could account for 3-5% of the total banking market in Morocco by 2018.
Improved payment infrastructure supported the growth of card payments channel
Banks and retail outlets in Morocco expanded their infrastructure networks between 2009 and 2013. The increasing acceptance of debit and credit cards at retail outlets and a consumer shift towards making purchases directly with cards resulted in an increasing number of point-of-service (POS) transactions.
Due to these figures, the use of cards as a payment channel is expected to register widespread acceptance between 2014 and 2018.
The number of ATMs in Morocco increased at a CAGR of 9.44% from 4,144 in 2009 to 5,945 in 2013, and is anticipated to increase further, from 6,442 in 2014 to 8,782 in 2018, at a CAGR of 8.06%. This is primarily due to competition among banks, which forced them to increase their ATM networks and offer convenient banking services to customers.
The number of POS terminals recorded a CAGR of 4.55%, increasing from 19,994 in 2009 to 23,893 in 2013. The number is expected to grow between 2014 and 2018 due to the expansion of the retail and tourism sectors.
The number of POS terminals is anticipated to rise from 24,813 in 2014 to 28,177 in 2018, at a CAGR of 3.23%.
POS terminal penetration – calculated as the number of POS terminals per 100,000 inhabitants – also increased, from 63.4 in 2009 to 72.7 in 2013. It is expected to increase over the next few years to reach 81.7 in 2018.