ACI Worldwide — GLOBAL PAYMENT TRENDS — Charting the growth of 'immediate payments'

Egypt does not have a real-time payments system in place. However, in April 2021, the central bank announced plans to introduce a real-time payments module in the future. Egypt remains a cash-driven society, with consumers preferring to use cash for day-to-day transactions. With the government working to improve financial inclusion and infrastructure, the use of electronic payments is expected to increase over the next few years.

To boost non-cash transactions, the Central Bank of Egypt (CBE) is restricting cash and check payments, focusing on mobile payment accounts and introducing new laws to promote electronic payments. Amid the COVID-19 pandemic, the payments market is undergoing a major change and Egyptian consumers are increasingly opting for secure payments such as contactless — a step towards cashless payments.

ACI’s Take

The Egyptian Banks Company (EBC) has begun introducing the Immediate Payments Network, a new real-time payments scheme modeled on India’s UPI and sponsored by the central bank. (At the time of writing, the scheme was in a pilot phase with a handful of banks.)

The original rollout plan was aggressive, seeking to capitalize on momentum at the time to get to market quickly with widespread participation from the country’s banks. And then the pandemic intervened.

With COVID also having followed a period of recession, further issues around scheme sponsorship left the market reluctant to invest in new projects. Driving participation will therefore be challenging in a market where key stakeholders are now more risk averse than they otherwise would be regarding experimental, innovative schemes.

Furthermore, Egypt is not expected to follow ISO 20022. This presents future challenges regarding both local and cross-border interoperability, although there is a counterpoint to criticism regarding this decision: many adults are unbanked and there is also no existing national ID. This all adds up to the feeling that the UPI model is a better bet.

The hope from industry-watchers on the ground is that all banks will be mandated to participate in the scheme, and that they will be expected to allow for fintech and non-traditional PSP connectivity. This in turn would accelerate the innovations needed for real-time payments to make an immediate impression on a cash-reliant society; only value-added consumer use cases will displace cash and drive rapid adoption. The question is whether such a scenario will shake enough banks out of their “wait and see” mode, given how satisfied many appear with revenue they currently receive from card payments. But they should be in no doubt that real-time payments are coming, and they represent a big opportunity for organizations prepared to be proactive in pursuit of growth. Those that don’t get on board — even today’s market leaders — risk coming out on the wrong side of changing consumer expectations.