 |
Al-Ahram Weekly 29 Apr. - 5 May 1999 Issue No. 427 
|
||
Published in Cairo by AL-AHRAM established in 1875 |
 |
 |
|
|
Al-Ahram Weekly 29 Apr. - 5 May 1999 Issue No. 427
|
||
| Published in Cairo by AL-AHRAM established in 1875 |
|
|
|
Egypt Region International Economy Opinion Culture Profile Focus Special Travel Sports People Features Living Time Out Chronicles Cartoons Letters Banks hurt by credit card fraud
by Shaimaa LabibPlastic money in Egypt is rapidly gaining favour with consumers as they rush to supplement cash with credit. Even paying by card electronically on the Internet is becoming popular in Egypt.
Payment cards are available in the country and include debit and credit versions of consumer and commercial cards. These cards can be used at cash dispensers -- Automated Teller Machines (ATMs) -- for purchasing goods and services.
Debit cards are linked to a bank account, usually a current account, from which money spent on the card is deducted while credit cards, which are more widely used, are payment cards linked to a line of credit. The amount of credit available to a cardholder is known as the spending or credit limit.
According to Attia Salem Attia, director of the credit and retail banking department at the National Bank of Egypt, the use of credit cards and plastic money, in general, is expected to evolve very rapidly as more banks start introducing credit card services.
However, Attia argued that there are factors still restricting credit card expansion in Egypt.
"The mentality of many people is one of the main hindrances to issuing credit cards. People are afraid that if they present the bank with the financial information needed to issue the credit card, the bank will use this information against them. Therefore, it is increasingly important for major banks to organise media campaigns to accompany the introduction of credit cards to make people aware of the importance of using credit cards. These campaigns will also serve to build up people's confidence in banks' commitment towards their customers in guaranteeing the secrecy of their financial information," Attia said.
He added that the expansion of credit facilities holds great promise for spurring the growth of the Egyptian economy and pulling it out of recession. "Banks would be able to invest the accumulating amounts of cash, and hence contribute to economic development," Attia said.
Another factor hampering expansion of credit cards in Egypt is the absence of reliable credit rating bureaus that would enable banks to check the clients' credibility, the banking official said.
Lack of information about fraudulent use of credit cards can have a negative influence on their promotion in Egypt. "There is a need to establish a credit rating bureau that would provide credit institutions with information about clients such as whether they have previously misused their credit cards or not," Attia said.
Banks that have been severely hurt by bad debts, which result from clients' misuse of credit cards, have not been adequately compensated by resorting to the legal system since this process is usually very time consuming. Another weakness in the legal system is its inability to deter fraud. People who have misused their credit card can easily obtain another card at a different institution and misuse it once more. At present there is no mechanism by which a user's history can be traced.
Hoda Shoukry, deputy general manager and head of the card centre at Banque Misr, agrees with Attia on the importance of establishing a credit rating bureau.
According to Shoukry, a credit rating bureau would help by sharing information relevant to customers' credibility among all credit institutions and give special ratings to customers. A customer's credit history would include information about unpaid checks or misuse of credit cards. In that way, credit cards should function as a reference for a person's financial honesty and credibility. "If someone has a bad credit rating then this should affect him when he deals with another bank or even when he takes a new job," Shoukry added. She agreed with Attia that using the legal system to handle bad debts is often too time consuming.
"Legal disputes over credit card debts can often drag on for years, and even if the card-issuing institution wins a case, it usually means that the client is imprisoned and unable to repay the debt.
Punishment in such cases should involve discrediting the customer to ensure that the incident is not repeated with other banks," Shoukry said.
Using payment cards in electronic transactions on the Internet is also gaining in popularity.
According to Miah Termanini, business development manager at Visa International, one of the world's best known brands in the payment card business and a leading payment card in Egypt, electronic payment is fast becoming one of the most common payment methods in Egypt as a result of the increasing number of Internet subscribers.
"In this regard, Banque Misr has announced the adoption of Visa's Secure Electronic Transaction (SET) system. This system will be deployed with the help of Visa International, and it will guarantee the security of on-line transactions between the bank and its cardholders," Termanini said.
According to Shoukry, Banque Misr, in cooperation with Visa International, is updating payment systems to support electronic commerce which will significantly help Egyptian businesses to trade with other businesses around the world on the Internet.
It is expected that the operation of the SET system will enable the bank to minimise the use of security measures deployed by other foreign banks to guarantee the secrecy of transactions.
