Safaa Ahmed, a government employee, says that until about a year ago she used to stand in line at the cashier at her workplace to receive her salary. Sometimes the 40-year-old had to wait for hours, especially ahead of long weekends or holidays.
Now, as part of the government’s decision to digitize such payments, Ahmed and thousands of other employees have their salaries transferred to their bank accounts. “Withdrawing cash from the ATM machines saved me a lot of time,” she says. “I also started paying for things I buy, food or clothes, using the card. I was worried the first time I did it, what if it does not work, what if I lose money, but now it is a much easier process.”
The Central Bank of Egypt says the project to issue over 5 million cards for all government employees reduces the overall cost of paying salaries and keeps money within the financial system. Roughly 44 million people are eligible to enter the formal banking sector in Egypt, according to the World Bank. Yet only 10% to 15% of Egyptians have bank accounts, reflecting a long-standing distrust of banks.
High bank charges and fears that banks may carry out investments forbidden by Islam are among the reasons Egyptians give for keeping their money at home, usually stuffed in the mattress, under the floor, or inside tin cans in the kitchen if they can’t afford a safe box. So the government is pushing for financial inclusion, particularly the use of digital payment services. The dominant digital products are split between mobile wallets and solutions for e-commerce.
The numbers of end-users for both platforms have picked up in the past few years, though as a percentage of Egypt’s population of 93 million they are still small. Luring more people to use digital platforms requires gaining their trust, says Sherif Kamel, professor of management at the American University of Cairo. “This is a population that prefers to have the money rather than bank it,” he says. “We can’t take them from one end to the other unless they understand (how it works), feel safe and feel they trust the financial system more.
“You can have the applications available and accessible to everybody but unless people understand, trust and know how to use it, they will not,” Kamel adds. That mission is not impossible in Kamel’s opinion. Egypt has a young population, around 65% is under the age of 35, so a boom in digital payment services should be easy to achieve if financial institutions focus on awareness campaigns. “You need to really spread across thousands of villages nationwide,” Kamel says. “This is how you do financial inclusion, you don’t go for those who are reachable and accessible.”
For non-government entities that continue to pay their employees in cash, payroll service provider Dopay is eager to get their business.