Morocco’s economy was adversely affected by the financial crisis. However, domestic demand for goods and services, driven by a fiscal policy to push stimulation and the protection of purchasing power, helped to sustain non-agricultural activities and was an engine of growth for Morocco’s payments industry
In 2014, cheque payments and credit transfers were the most popular payment instruments, having a combined industry share of 97.1% in terms of transaction value, while the share of payment cards doubled from 0.5% in 2010 to 1% by the end of 2014.
The share of payment cards is rising as the government and banks promote awareness levels and associated benefits among consumers and merchants. The adoption of EMV standards and growth in e-commerce and retail industries also supported the industry’s growth.
While leading card issuers push for growth by offering improved products and services and aggressive marketing campaigns, the government is also keen to encourage electronic payments and bring in a large number of the unbanked population within the formal banking system through its financial inclusion (FI) programme. According to statistics from the World Bank, the number of total deposit accounts relative to the population increased to 50% in December 2010, 54% in December 2011, 57% in December 2012, and 58% in June 2013.
Transaction values at ATMs were the main contributors between 2010 and 2014, representing a dependence on cash. However, with governments and domestic banks making sustained efforts to increase awareness levels and benefits of electronic payments, a gradual shift is anticipated over the next five years.
Payment infrastructure driving card growth Banks and retail outlets in Morocco expanded their infrastructure networks during the review period into rural areas, to increase their customer base and improve financial access for consumers. The increasing acceptance of payment cards at retail outlets and a consumer shift towards making purchases directly with cards resulted in an increasing number of POS transactions between 2010 and 2014. Consequently, the use of payment cards is expected to register widespread acceptance between 2015 and 2019.
Similarly, contactless technology is being gradually rolled out across Morocco. In 2012, M2M Group, an electronic transactions processing solutions provider, installed a contactless ticketing system in the Casablanca tram system and in January 2014, the technology was extended to M’Dina bus network.
Debit cards continue to dominate In terms of transaction value, debit cards remained the most popular payment card over the last five years. The Moroccan population is dominated by a Muslim population who generally avoid credit cards for religious reasons. Consequently, the debit card market registered growth in terms of volume and transaction value between 2010 and 2014. In order to boost card sales, banks and card issuers are offering EMV-compliant cards and bespoke products to meet specific customer needs.
The average transaction value for debit cards declined marginally at a CAGR of -0.17%, from $99.50 (MAD837.40) in 2010 to $98.90 in 2014. As consumers especially in rural areas prefer to use cash for purchases and coupled with low acceptance by merchants, the total average transaction value for debit cards decreased in recent years.
Banks are trying to attract their customers’ to spend frequently at POS terminals using their debit cards, by offering them wide range of benefits including reward points and discounts at partner retailers.
Approval for Islamic banking offers growth prospects for credit card market 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 BMCE Bank and Banque Centrale Populaire du Maroc (BCP), have equipped themselves to set up new banking branches adhering to Islamic standards.