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Al-Ahram Weekly On-line 21 - 27 September 2000 Issue No. 500 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly On-line 21 - 27 September 2000 Issue No. 500
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Elections Development Region International Economy Opinion Culture Features Special Travel Living Sports Profile People Time Out Chronicles Cartoons Letters More plastic money
By Shaimaa LabibPlastic money in Egypt is rapidly gaining favour with consumers as they rush to supplant cash with credit. Even paying over the Internet by credit card is becoming popular.
Finance and banking experts predict that the number of credit card holders will increase here dramatically by the year 2005. These predictions were made public last week in a conference entitled "Towards a cashless world," organised by MasterCard, one of the world's best known brands in the payment card business and a leading payment card in Egypt. The conference aimed at discussing the advantages of using credit cards with regard to the economy and the factors that hinder the credit cards' promotion in Egypt.
According to Mohamed Abdel-Rehim, Central Bank of Egypt's banking control unit deputy manager, a credit card has many advantages that make it preferable to paper money in many countries.
"By expanding the use of credit cards, the government can minimise the costs of issuing and printing paper money," Abdel-Rehim said. He added that the amount of damaged money taken out of circulation last year was LE38.5 million.
Abdel-Rehim said that the use of credit cards and plastic money, in general, is expected to evolve rapidly as more banks start introducing credit card services. However, he noted that there are many factors that hinder the promotion of credit cards in the Egyptian market.
"The mentality of many people is one of the main hindrances to issuing credit cards. They still do not understand that credit cards represent an easier means of payment. Therefore, it is increasingly important for major banks to organise media campaigns to coincide with the introduction of credit cards," Abdel-Rehim 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 thus contribute to economic development," Abdel-Rehim said.
Despite the increasing use of credit cards in the last few years, the number of card holders in Egypt is far smaller than other Middle Eastern countries, according to Nabil Hashad, an economics expert in the International Monetary Fund (IMF). Currently there are only 240,00 credit card holders in Egypt, he said.
To increase the number of card holders, Hashad suggested, "banks should set aside competition to issue credit cards in the present phase. They have to cooperate first in establishing the infrastructure needed for the introduction of credit cards on a wider scale."
Another factor hampering expansion of credit cards in Egypt is the absence of reliable credit rating bureaus that would enable banks to verify clients' creditworthiness, according to Sanjay Kao, a manager at CityBank. "There should be a mechanism that would help banks share information relevant to their customers' credibility," Kao said.
Banking experts agreed that the use of credit cards to make payments over the Internet is becoming more popular.
According to Mohamed Belarj, managing director of MasterCard International for the Middle East and North Africa region, 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 addition to credit cards, debit cards are now being introduced in Egypt. Money spent using these cards is deducted automatically from a bank account.
