The US system Apple Pay has recently launched its services in Egypt, allowing iPhone users to use the mobile payment service in stores, mobile applications, and websites supporting the service.

The Central Bank of Egypt’s (CBE) authorisation to activate Apple Pay comes in tandem with its decision to expand the use of the InstaPay application, allowing it to receive transfers from abroad.

The move is meant to facilitate financial transactions for expats and the transfer of funds to their families in Egypt.

InstaPay was initially designed to enable instant transfers between domestic banks, and since then the application has gained remarkable traction.

In November, Ehab Nasr, assistant deputy governor for banking operations and payment systems at the CBE, said that “financial transactions conducted via InstaPay are projected to reach LE2.6 trillion by the end of 2024, increasing by 215 per cent from LE855 billion in 2023 and recording 4,700 per cent growth compared to 2022.”

“The instant payments network now integrates all the banks operating within Egypt, solidifying its position as one of the most robust financial systems globally,” he added, noting InstaPay’s “extensive user base with more than 11.3 million customers registered on the platform.”

Hani Abul-Fotouh, former vice president of the National Bank of Egypt, said that the introduction of new e-payment applications aligns with the CBE’s long-term strategy to transition from cash transactions to digital payments and to achieve financial inclusion.

He said that the authorisation of Apple Pay was an important step towards the widespread adoption of contactless payments.

The application allows users to store their personal card data securely, facilitating daily transactions such as shopping without the need to use bank cards or disclose sensitive information like card numbers, expiration dates, or PINs.

The security features that come with contactless payment methods, eliminating the risk of data exposure by ensuring card information remains confidential, are meant to foster user confidence in e-payment methods, he added.

The measures taken by the CBE are meant to achieve a cashless society, a cornerstone of its strategy to curtail cash-based transactions that are sometimes associated with facilitating corruption, Abul-Fotouh noted.

Beyond combating financial malpractices, the transition also offers long-term advantages, such as enabling uninterrupted access to payment services around the clock without the need for direct cash dealings with service providers.

Moreover, such payment methods are designed to accommodate varying levels of financial literacy, encouraging broader adoption of digital payment solutions.

The CBE announced that financial inclusion rates in Egypt had risen from 27 per cent in 2016 to 71 per cent of the adult population by the end of June 2024.

The government, in cooperation with the banking sector, is working to transition financial services from cash-based transactions to electronic systems. The Nasser Social Bank, under the supervision of the Ministry of Social Solidarity, has directed its clients including divorcees and widows receiving exceptional pensions to register their mobile numbers in their personal names with telecommunications companies, for example.

 These numbers are then linked to their bank accounts to establish e-wallets that facilitate the transfer and withdrawal of pensions.

The National Insurance and Pensions Authority has adopted parallel measures, integrating nine million pension recipients into the banking system. The Social Housing and Real Estate Finance Support Fund reported in 2023 that 65 per cent of its beneficiaries since its inception in 2014 had engaged with the banking system for the first time through its programmes.

Financial expert Ahmed Shawki said contactless payment applications bolster financial inclusion, helping to not only expand the number of people included in the banking sector but also to promote a shift from the informal to the formal economy.

This transition enhances the efficiency of tax collection and state-revenue management, he added.

Shawki pointed to the widespread use of InstaPay as a key driver in this process. By providing instant transfer services, InstaPay allows service providers to direct payments directly into accounts, enabling faster and more efficient withdrawal processes, account clearing, and easier transactions without time constraints or reliance on in-branch banking.

State institutions also want to establish trading services with merchants via InstaPay, Shawki said, facilitating financial transactions between traders, Government entities, and the public.

Competition is heating up between e-payment applications in the Egyptian market, including between InstaPay, the country’s first instant-payment application, and Apple Pay.

The competition is fuelled by the expansion of digital-payment methods in Egypt, where people now hold 45 million mobile wallets and 67 million bank cards.

* A version of this article appears in print in the 19 December, 2024 edition of Al-Ahram Weekly