Thursday,19 October, 2017
Current issue | Issue 1288, (24 - 30 March 2016)
Thursday,19 October, 2017
Issue 1288, (24 - 30 March 2016)

Ahram Weekly

More costly ads

Unannounced restrictions on international credit-card transactions are hurting online advertising companies in Egypt

More costly ads
More costly ads
Al-Ahram Weekly

Egyptian online advertising companies are being pushed to the limit after banks across the country limited the use of credit-card transactions to pay international parties, according to Al-Ahram Weekly sources.

The restrictions affect the ability of online advertising companies to pay companies like Facebook and Google for ads placed to promote their clients’ businesses, the sources  told Stefan Weichert.

According to Ahmed Nagy, managing director of eMarketing, an online advertisement company, the restrictions have been put in place by the banks to control outflows of dollars from Egypt. However, there has been no official instruction from the Central Bank of Egypt (CBE) to impose the restrictions.

This means big trouble for many companies,” Nagy said. He added that his company will be able to manage because it is a regional company with branches outside Egypt. “We can solve the problem by asking clients to transfer money to another country. Without this we would be in big trouble,” he said.

Online advertising represents the bulk of the business for many e-marketing companies, according to Nagy. While his company can manage, smaller companies without branches abroad might not be able to pay for online advertising to companies like Google and Facebook.

One of the companies affected is medium-sized advertising company MRCO-Egypt, whose founder Mohamed Riad has been forced to find a solution so that his company can stay in business. 

Eighty-eight per cent of our advertising services are online, so we will be forced to shut down if we cannot think of a solution,” Riad said. Online advertising through Google and Facebook is important for the company’s clients, because the online companies can offer targeted advertisements that print advertising cannot.

 However, the restrictions are not yet universal, and Nagy explained that the banks are only able to close down a certain number of cards each day. This means that the remaining credit cards can be used freely. 

So you can have a situation in which two companies with the same bank can have a different experience. One might be able to transfer money to international parties and one might not,” Nagy said.

The manager of another company, speaking on condition of anonymity, said that he has set up bank accounts abroad in countries like the United Arab Emirates and Saudi Arabia and uses these to pay his bills.

It is very costly, but without it the only other solution would be to stop our business,” he said.

Another option for affected companies without branches outside Egypt, according to Nagy, is to buy dollars, deposit them in a bank, and then make a regular transfer through a bank account by paying a fee.

This is a very costly solution,” Nagy pointed out, adding that he does not think the restrictions will be eased any time soon because of Egypt’s unstable economy and the need to control outflows of hard currency.

The Weekly has been in contact with Google, but the company declined to comment. 

E-commerce in Egypt is expanding, with a growing need for online advertisements as a result, according to a State of Payments report by the online payments company Payfort.

Not all online businesses have been affected by the current restrictions. Those doing business inside Egypt are not affected because transactions are made in Egyptian pounds and there is generally no need to pay international parties. 

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