Go deeper with GlobalData
The impact on Morocco of the
wave of political unrest across North Africa and the Middle East
remains uncertain. What is clear, however, is that the country has
many of the ingredients for a thriving payments industry. But, asks
William Cain, can Morocco now deliver on its rich
potential?
Morocco has come to
be considered one of the world’s most promising cards and payments
markets thanks to its strong economic performance and quickly
developing infrastructure.
The limited overseas exposure of
its banks and tight regulation helped the country avoid the worst
of the fall-out of the financial crisis.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataRecent political unrest sweeping
across North Africa and the Middle East will undoubtedly pose new
and as yet unquantifiable challenges to the country’s economy and
therefore the development of its payments market.
So far, in the wake of the
financial crisis, Morocco has come to be considered one of the best
payments opportunities in the EMEA region. The combination of high
cash usage, robust GDP growth and a rapidly increasing cardholder
base are the main reasons businesses across the payments spectrum
are looking at the country with interest.
GDP expanded consistently over the
last three years, registering increases of 2.7% in 2007, 5.6% in
2008 and 4.9% in 2009. Unemployment fell from 9.8% to 9.1% and the
economically active population increased marginally to just under
6m.
Cards International
research shows card penetration increased in 2009 to over one card
per economically active individual, suggesting a good level of
banking penetration among the working population.
However, Morocco has a high number
of individuals in the 15 and over age bracket that are not
considered economically active and are either retired or
participating in the informal economy.
Card penetration
falls to just 0.46 cards per person if everyone in Morocco’s
15-plus age bracket is included, highlighting its large unbanked
population and the opportunity for low income products like prepaid
cards.
There are still significant
payments challenges which need to be overcome if Morocco is to
deliver on its potential. Card usage is still driven primarily by
ATM withdrawals, which make up more than 90% of total card
usage.
Overseas card usage by domestic
Moroccan card holders is limited by a regulatory allowance called
the Allocation Touristique. Controls on the Moroccan currency, the
dirham, limits travellers to overseas spending of MAD40,000
($4,900) per year.
Some in the industry argue that
underlying these challenges is one important issue: limited
merchant acceptance.
In this respect, Morocco is similar
to a number of the larger Middle East and North African economies,
where point of sale card payments remain underutilised.
In Morocco’s
case, some payments experts argue that one of the most effective
means of boosting acceptance would be the introduction of greater
competition into the domestic merchant acquiring market, currently
dominated by one issuer and acquirer, Centre Monétique
Interbancaire (CMI).
Merchant service charges are higher
than average in the country, making card payments less attractive
for retailers to offer.
The general cards market would
benefit, according to one payments expert interviewed by Cards
International, if one or two international merchant acquirers
were permitted to enter the market, driving down merchant service
costs and increasing card acceptance.
This is not the only challenge,
said one source in an off-the-record briefing, but it is a major
one.
“Having a sole acquirer in Morocco
is not serving as well as having multiple acquirers or another
acquirer in the Moroccan market,” the source said.
“I can say that the sole acquirer
we have [CMI] has done a very good job in stabilising the system…
[but] we should probably be able to do another assessment and see
what the opportunities are and how we can tackle the
challenges.”
If these challenges can be
overcome, Morocco’s economic performance can be strengthened in the
future by a more developed payments infrastructure.
This can play an important role in
supporting the development of Morocco’s economy as it becomes less
reliant on agriculture and more on services and consumer
spending.
“It is a high-growth market,” said
Francesco Burelli, principal at consultancy Value Partners.
“Morocco is forecasted to have one
of the highest GDP growth rates in Africa – higher than in other
neighbouring countries in North Africa.
“This, within the limitations and
the unpredictability of the social unrest and of the changes in the
region, makes Morocco one of the most interesting and highest
priority markets in the region.”
The payments
landscape
The primary means
of consumer payments in Morocco are cash, cheques, cards, money
transfers, credit cards and direct debits. Online and mobile
payments are starting to build from a low base.
In 2009, the total amount of fiat
money in circulation was MAD143.1bn, an increase of 6.2% on 2008,
according to Bank al-Maghrib, Morocco’s central bank. That compares
to an increase of 7.3% between 2007 and 2008.
Morocco’s M1 currency supply – the
total physical amount of cash and coins in circulation – stands at
around 28% of the total amount of money in the economy, 10
percentage points lower than in 1987, the furthest the central
bank’s figures go back.
As the amount of cash in
circulation declines, the share of card payments is rising.
The number of cards in issue
increased in 2009 to 6.28m, up 20% on the prior year. Two-thirds of
these are Visa-branded, a total of 4.3m. There are around 1.5m
private label cards, primarily store cards, in issue and 440,000
MasterCard branded products, giving it a market share of less than
7%. CMI has 1% of the total cards in issue in the country.
The overall number of card payments
in 2009 was 11. 2m, up 9.7% on the prior year. The value of those
payments was MAD4.3bn, an increase of 24.7%.
Bank Al-Maghrib said much of this
increase was the result of greater point-of-sale spending, which
jumped from 6.7m transactions (MAD4.1bn) in 2008 to 8.1m (MAD5bn)
in 2009. Point-of-sale transactions represented 72.5% of all card
payments in 2009, followed by ATM-initiated payments (for example
the payment of bills or prepaid phone top-ups), which made up 26.9%
of all card payments.
The highest area of card-related
activity remains in cash withdrawals at ATMs, which increased to
over 119m transactions in 2009, at a total value of MAD101bn. The
comparable figures in 2008 were 110m and MAD83.9bn
respectively.
“Morocco is an important platform
in the electronic payments industry,” said Visa’s Mohamed Touhami
El Ouazzani.
“If you look at the different
actors across electronic payments globally, many of them are active
here.
“On top of that, we have some very
strong Moroccan vendors including S2M, M2M and HPS operating in the
market who are very strong in regions across the world. Moroccan
technology from this point of view is very strong.
“In addition, you will see that the
Moroccan economy is developing a lot of interest because of its
growth. The transparency of the market is also something that
people like.”
EMV, foreign
transactions
In its most recent annual report,
Bank al-Maghrib said there were now six Moroccan banks capable of
issuing and processing cards using the EMV chip standard.
The first to become EMV compliant
was Crédit Populaire Maroc. The development of EMV means tourists
visiting the country can use their EMV cards in the bank’s ATMs,
helping to reduce fraud.
All of Morocco’s ATMs accept Visa
EMV cards and in 2009, the central bank started a project to
convert the remaining ATMs which did not accept MasterCard-branded
EMV products.
The total number of ATM cash
withdrawals from foreigners in Morocco in 2009 on Visa cards was
3.022m (down 6.2% on the prior year), with a value of MAD4.452bn
(down 3.9% on the prior year).
That compares to a total of 2.505m
MasterCard transactions (down 1.7% on 2008) with a value of
MAD3.684bn (down 0.3% on the prior year).
These declines reflect the
deterioration of European economies and reduced tourism in that
period.
The total number of non-cash
transactions (excluding cards) made in the Moroccan economy in 2009
was 46m at a total value of MAD1.518trn – a decline of around 10.1%
from MAD1.691trn in 2008.
The value of credit transfers
declined by 20.1%, to MAD556.5bn, a decline of 10.2% from
MAD696.8bn in 2008.
The central bank says this decline
was in part driven by corporates moving away from retail payment
mechanisms in favour of its real time gross settlement system set
up in 2007, called the Système des Règlement Bruts du Maroc
(SRBM).
The value of SRBM transactions
stood at MAD607, an increase of 38.6% from a figure of MAD438bn in
2008.
The number of cheque transactions
declined slightly from 27m to 26.8m.
They still remain the most
significant means of non-cash, non-card payment in the country,
making up 54.5% of all payments value in Morocco.
Key players
Morocco is home to three of
Africa’s top ten banks ranked by assets. Attijariwafa Bank, Banque
Centrale Populaire and Banque Marocaine du Commerce Extérieur rank
sixth, seventh and eighth in a recent Bankers Almanac survey. They
ranked behind the big four South African banks Standard Bank, Absa,
Nedbank and FirstRand. Banque Extérieur de Algérie was fifth.
French-headquartered BNP Paribas
and Société Générale also have a strong presence in the Moroccan
retail banking and cards market.
Attijariwafa
Bank
Attijariwafa has MAD290.3bn in
assets, making it the country’s largest bank.
It had customer loans of MAD220bn
at the end of 2009, up 15.1% on the prior year, and deposits of
220.8bn, up 9.6%. Loans issued in Morocco were MAD155.7bn, up 11.5%
on the prior year.
Among its main initiatives is its
Low Income Banking strategy, a line of products which encourages
lower income earners to start using banking products.
It has sought to extend its reach
in this segment by opening bank branches in more rural areas of the
country and extending its cardholder base.
The service is described as “a
simplified bank account including basic electronic money products”
and is provided at 360 branches offices across the country.
Attijariwafa has a longstanding
commitment to education in Morocco and is involved in a pilot
scheme to offer the country’s first electronic university bank card
pilot with Université Hassan II and Santander.
Students, faculty and
administrative staff are able, via interactive kiosks, to gain
access to a number of university services using the card. The card
is MasterCard branded and can also operate as a credit card.
Another programme at the bank,
Solutions Bidaya, looks to extend its reach into unbanked segments.
The proposition is aimed at those under the age of 35 and includes
access to consumer loans and transactional banking products.
The bank does not provide figures
for the value of volume of debit or credit card spending. It issued
MAD18.5bn in new consumer loans in 2009, a figure which includes
personal loans, car loans and household equipment loans.
Banque Centrale
Populaire
Banque Centrale Populaire (BCP) has
total assets of MAD208bn, and is Morocco’s second-largest
lender.
It offers one of the most important
prepaid products in Morocco – a package with allows pensioners to
withdraw benefits through a reloadable ATM card.
The product, called Rahati, is a
card which can be used for ATM withdrawals across BCP’s network of
800 branches. There is a MAD5.5 charge for ATM withdrawals using
the card at another bank’s cash machine.
It is proposed by the country’s
Caisse Interprofessionnelle Marocaine de Retraites (CIMR),
Morocco’s pension fund, that the card will ultimately become
compulsory for all pension payments. Rahati is affiliated with the
CMI card brand.
BCP’s total customer deposits at
the end of its 2009 financial year stood at MAD161bn, up 6.3% on
the year earlier. Loan advances to customers were MAD117.7bn, up
15.3%.
It claims to have 3.1m customers,
1.7m bank cards, a market share of customer deposits of around
26.9% and 23% of the country’s loans.
Banque Marocaine du
Commerce Extérieur
Banque Marocaine du
Commerce Extérieur is Morocco’s third largest bank. At the end of
2009 it had more than 600 ATMs, 1.1m bank cards in issue (up 12.3%
on the prior year) and, it claims, more than 170 products on
offer.
Among the most recent additions to
this product portfolio are individual and business prepaid cards, a
strategy it is using to try and tempt more unbanked customers into
the financial mainstream.
Like Attijariwafa Bank, BMCE has
developed and marketed a line of basic products that specifically
cater for the low income segment. Linked to this programme is its
newly created BMCE Lilkoul mobile banking product and prepaid
card.
Users of the service can load the
prepaid card using their mobile phone. The BMCE Lilkoul service can
also be used to initiate money transfers from the customer’s bank
account or prepaid card and stop payment orders on bank cards.
The bank says electronic banking
activity is “showing noteworthy progress”, with card sales up 68%
in its BMCE Jisr range, 55% for its BMCE Blue card and 21% for its
range of Visa Electron cards.
The bank is also a leader in the
fledgling markets of Congo, where it issued 15,301 cards in 2009,
and Mali, where card issuance increased 58% to 31,425 cards for the
year.
Banque Marocaine du Commerce
Extérieur had total customer deposits of MAD96.3bn, up 8% on the
prior year. Loans and advances to customers stood at MAD65.4bn, up
10.5%. Its total assets were MAD168bn at the end of 2009.
Centre Monétique
Interbancaire
Monétique Interbancaire was set up
by BCP; BMCE; Wafa Cash, a subsidiary of Attijariwafa, and
Interbank in February 2001 and became fully operational in 2004.
Its main function is as a payments switch.
In the early days of electronic
banking, domestic banks in numerous countries formed interbank
organisations which could provide general processing and clearance
functions at a domestic level in an effort to share processing and
merchant acquiring costs.
As the volume of cross-border
payments and the number of cross-border business have increased,
these types of interbank switch organisations have been put under
heavy pressure by the opening up of national boundaries.
This has been the case particularly
in Europe, where the Single European Payments Area initiative has
opened up payments markets and simplified cross-border banking and
payments arrangements.
While no figures are available on
CMI’s corporate relationships, domestic acquirers generate an
average of one third of their income from multinational merchants,
which are prime targets for cross-border acquirers.
Currently, this has impacted CMI to
a limited extent. It has a dominant position as a merchant acquirer
in Morocco and has recently entered the market for issuing cards –
notably a prepaid card arrangement with Banque Centrale Populaire
on pension payments.
Its number of cards in issue
increased 268% in 2009 from a low base and now stands at 72,000, up
from 19,500 in the previous year. CMI operates a permanently
operating call centre for the granting of telephone authorisations
to traders and a help desk for problems with electronic payment
terminals.
It also provides measures to reduce card fraud and has been
involved in the programme to convert bank cards in the country to
the EMV standard. CMI was approached for comment but did not
respond.
