The Egyptian economy is the second-largest in the Middle East after Saudi Arabia. The economy depends largely on agriculture, tourism and cash remittances from Egyptians working abroad, mainly in Saudi Arabia and Gulf countries, but how is the card market faring in this climate?
With the government and banks striving to offer basic financial services to the unbanked population and banks expanding their presence in rural a reas, the Egyptian cards and payments industry registered positive growth between 2010 and 2014.

The government’s financial inclusion program, supported by improved banking infrastructure, new product develop¬ments, and a growing awareness surround¬ing e-payments were the main drivers of growth.

The adoption of EMV standards, growth in the e-commerce, and retail sectors supported industry growth.

Fostering the cards and payments industries
The number of ATMs increased at a CAGR of 10.89%, from 4,821 in 2010 to 7,290 in 2014, and is anticipated to increase further from 8,107 in 2015 to 10,878 in 2019, at a CAGR of 7.63%.

Banks are expanding their ATM networks to provide banking convenience to their cus¬tomer base as well as tapping existing ones in the market.

The NBE increased the number of ATMs installed, at an annual growth rate of 23%, to reach 1,535 ATMs as of September, 2014.
In 2010, the Central Bank of Egypt (CBE) selected GiroNil to co-develop the national Automated Clearing House (ACH) system in Egypt.

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The electronic network, built by the EBC and GiroNil Egypt, was launched in June 2010 when the CBE and all 38 banks operating in the market were successfully interlinked.

The ACH system is designed to handle small-value retail payments and increase the use of cash substitutes, particularly payment cards.
The number of POS terminals in Egypt recorded a CAGR of 10.66%, rising from 33,884 in 2010 to 50,808 in 2014. With the increased number of POS terminals installations at retail outlets, the potential of card-based payments in Egypt is also expected to grow.

Similarly, banks are also installing POS terminals, as merchants are gradually accepting payment cards. As of September, 2014, NBE had installed 9,169 POS terminals across Egypt.

Similarly, in October 2013, CIB became an exclusive provider of POS terminals for Ikea stores in Cairo.
The growing payment infrastructure, with the CBE’s initiation led to the growth in industry share of payment cards over the past five years.

Debit cards continue to dominate
To decrease cash transactions, the Egyptian government launched ‘Salary Project’ in 2011, under which the salaries of five million government employees were paid directly into bank accounts; employees could withdraw their salaries using debit cards.

Following the project’s successful implementation, new government divisions are being added to the project.
Such initiatives are anticipated to further increase the volume of debit cards in circula¬tion over the next five years.

Similarly, global scheme providers such as MasterCard are striving to increase debit card use. In 2014, MasterCard launched a Cashless Campaign in association with NBE, the United Bank, Emirates NBD, Housing and Development Bank and CIB.
E-commerce offers growth prospects for card payments
In general, e-commerce has been tough market in Egypt due to poor levels of online literacy, inadequate telecom infrastructure and a large rural population. Despite this, Egypt has emerged as a key market for e-commerce in the Middle East. Rising internet and smartphone penetration coupled with an increasing number of operators providing online sales of books, electronics, fashion products, games and other retail products fuelled the growth of e-commerce.

E-commerce grew from $745.2m (EGP4.2bn) in 2010 to $1.3bn in 2014, at a CAGR of 14.21%, due to rising online and mobile penetration, increasing consumer confidence for online transactions and the presence of online gateways. The growth in online shopping is expected to create opportunities for growth in the cards and payments industry for the foreseeable future. The value of e-commerce is expected to record a CAGR of 6.56%, to reach $1.8bn in 2019.

The steady growth of online shopping indicates the priorities of technology aware consumers who enjoy the convenience, speed, value and safety of online shopping transactions. In 2012, Visa and NBE began to offer the Verified by Visa service, aimed at providing customers with a secure, convenient and reliable online payment tool.

Growth prospects in the prepaid card market
According to the World Bank, Egypt is the highest recipient of remittances in the Middle East and sixth-highest in the world. However, only 1% of recipients have bank accounts. T argeting the unbanked population, banks such as Banque Misr are offering the Hewalty MasterCard Prepaid Card, which enables unbanked consumers in Egypt to instantly receive funds from family and friends living abroad.

Other banks such as the NBE are targeting young consumers with the NBE Youth MasterCard and cashU prepaid cards. Organised retailers and vendors also began to accept prepaid cards with no processing fee. These retailers have approached banks to provide them with in-store POS termi -nals to attract consumers and increase sale volumes.

Egypt