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Al-Ahram Weekly 16 - 22 March 2000 Issue No. 473 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 16 - 22 March 2000 Issue No. 473
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Special Focus Travel Living Sports Profile People Time Out Chronicles All SET to spend?
By Niveen Wahish
Egyptflowers.com, Cairo's first online florist, started operating in May 1998. It closed down less than three months later. The reason for the failure -- clients could order only with a credit card, at a time when there were only 37,000 cardholders in Egypt.
Otlob.com -- which offers an online food home delivery service from restaurants around Cairo -- has had better luck. Ayman Rashed, managing partner of Otlob.com, does not have to worry about how many people have credit cards. His customers pay cash-on-delivery.
"I am already catering to a limited market -- Internet users in Egypt. Why, then, would I narrow the market even further by insisting on payment by credit card?" Not only are there too few credit card holders in Egypt to make such a business viable, argues Rashed, but those that do exist are often reluctant to disclose their credit card numbers online.
All this, though, is set to change. According to figures released by Visa International, cardholder expenditure in Egypt grew by 75 per cent between December '98 and December '99. But just as banks are embarking on a drive to increase the number of credit card holders in Egypt from the current 200,000 to around five million, the issue of credit card fraud through the Internet is rearing its ugly head.
In a letter to clients, Banque Misr recently announced that it was temporarily suspending all transactions on its Visa and Master credit cards via the Internet, regular mail and phone, following several incidents of fraud.
While Hisham Saleh, operations supervisor at Banque Misr, insists that the sums involved were not large, the move begs several questions related to security when using credit cards to purchase goods and services via the Internet.
The majority of Internet transactions by Egyptians, Saleh says, tend to be limited to ordering books or else downloading services from sites. These are generally small transactions "seldom exceeding $25." Larger transactions require the bank's approval before funds are withdrawn from clients' accounts.
The ban on Internet transactions, Saleh says, will be lifted as soon as Banque Misr has a more secure system in place to protect clients.
Last week Banque Misr revealed that it will soon have installed the necessary equipment and software to run a Secure Electronic Transactions (SET) system, a specially designed security procedure to guard e-commerce on the Web.
So far, Banque Misr is the only bank to have reported incidents of credit card fraud in Egypt. Sanjay Kao, vice president at Citibank, insists that his bank has had no similar incidents concerning its own credit card, launched on the market six months ago. Kao attributes this to the installation of a fraud early-warning system, which alerts the bank to any unusual transactions on clients' accounts. The early warning system allows the bank to check with clients to authorise any unusual transaction.
Conventional fraud detection systems, though, are unlikely to be up to the task of combating Internet fraud. Hussein Hamza, financial sector manager for Oracle Egypt, one of the country's largest software companies, insists that without SET in place, Internet transactions can never be fully secure.
Pekka Honkanen, senior vice president at Visa International, speaking at a press briefing held on the fringe of a major IT conference, 'Cainet' held in Cairo last week, explained that using SET, merchants do not see the cardholder's credit card account number, but they are given proof that the card is genuine and that transactions may go ahead.
According to the new system, Banque Misr will be giving its cardholders access to a web site where they may download special software on their computers. The software is designed to prove the identity of cardholder to merchant, and vice versa, and it encrypts the transaction data when it travels between the merchant and cardholder.
"Using a credit card in the absence of SET automatically involves taking a risk which customers do on their own responsibility," Hamza said.
Atef Saber, deputy manager of the credit card department of the National Bank of Egypt (NBE), stresses the impossibility of banks securing individual transactions, since it is up to the clients themselves to ensure that they only use secure sites. But he stresses that credit cards tend to operate in the customer's favour, because unless the merchant can prove that the client has received a service or a product in exchange for the amount discounted from his account, the client receives a full refund. "As long as the merchant has agreed to complete an unsecured transaction, it is the merchant who must bear the consequences," said Saber.
Saber thinks Egyptian banks are gradually adapting themselves to the requirements of the market. By the end of the year NBE will also have installed their SET systems.
"It's an investment that must be made," said Saber. An investment, too, that any merchant seeking to offer on-line services will have to make.
