The National Telecoms Regulatory Authority (NTRA) recently announced an increase in the use of electronic smart wallets to 16.3 million between January and June this year, a 16 per cent increase compared to 14.1 million in the first half of 2020.

It added that the number of electronic transactions via smart wallets had jumped by 175 per cent to reach 81 million in the first half of 2021, compared to 29.5 million during the same period in 2020.

Hesham Ibrahim, a professor of finance and investment at Cairo University, believes the transactions impact the banking sector and economy in general. People had begun using e-transactions, particularly smart wallets on cell phones, because they are easier and quicker than other forms of payment, he said.

They save time and money when traveling by public transportation or private car to accomplish tasks that take seconds on a cell phone.

“The increase in the use of e-transactions leads to a more-developed banking sector because it reduces cash transactions and the burden of exchanging, printing, and recycling paper currency,” said Ibrahim.

“It facilitates transfers and payments, whether between individuals or with government or private institutions. This trend is supported by the Central Bank of Egypt [CBE] because it improves the economy in general, which directly impacts the standing of the banking sector,” he added.

In the same week, the Information Decision and Support Centre (IDSC) announced the results of an opinion poll by the CBE’s Egyptian Banking Institute (EBI), which showed that nine out of ten users now have more confidence in e-payments in Egypt.

The poll also showed an 85 per cent reduction in cash transactions during the Covid-19 pandemic. This has led to a 690 per cent leap in e-payments online and for pay on delivery.

The poll further showed that 74 per cent of users using contactless payment methods are shopping online, with cash transactions continuing to decline and not returning to pre-pandemic levels.

Ahmed Mustafa, head of the Communications and Mobile Division at the Alexandria Chamber of Commerce and deputy chair of the General Division of Communications at the Federation of Chambers of Commerce, explained that awareness campaigns by the state to curb the spread of the Covid-19 pandemic had encouraged users to use e-transactions to avoid crowds and the risk of infection through paper currency.

Mustafa said that this digital transformation had been possible thanks to the creation of the National Payments Council (NPC) four years ago by President Abdel-Fattah Al-Sisi. The NPC made financial inclusion part of its strategic plans and a national goal that can be reached by advancing the use of e-transactions.

He said that the growing popularity of smart wallets had been due to their success, convincing people to use them more often and to rely on them as a main method for financial transactions and transfers.

Among the factors that had pushed for greater e-payments was the fact that e-commerce sites and telecom companies that manage smart wallets will refund customers quickly and easily after purchases or if there are errors during transactions, he said.

The availability of automated assistance services was another advantage that boosted consumer confidence in e-payments.

Contrary to this optimistic outlook, Loay Zoheir, chair of the Communications Committee of the Junior Businessmen Association, said that Egyptian culture continued to be wary of the digital transformation of banking, however. Zoheir said that the culture remained suspicious of banking institutions.

Wealthier people may prefer to use mail rather than the banks, and many medium and smaller-sized companies may still be wary of paying salaries through banks or e-transfers, Zoheir pointed out. Many people may prefer to keep cash savings at home or to invest in real estate, depriving the banking sector of these funds.

Zoheir believes that digital transformation in a country such as Egypt will need a further five to ten years to change the culture towards a greater trust in financial institutions. Digital transformation means that the simplest transactions, such as a plumber doing a small job in a house, would receive his fee via smart wallet or QR code, something that many workers in this category are still unwilling to do. 

But Ibrahim is optimistic about the future of digital transactions and smart wallets in Egypt because it is a global trend and something that the state is embracing. The banking sector is less worried about telecom companies invading the realm of bank transactions, Ibrahim said, adding that with the exception of complex or larger transactions, telecom companies now offer most of the financial transactions found at banks.

However, he said that this had been compensated by the fact that telecom companies rely on bank accounts for their transactions, requiring the banking sector to respond to the rapid progress in communications, to benefit from it, and to integrate further with the telecom companies.

*A version of this article appears in print in the 26 August, 2021 edition of Al-Ahram Weekly