The short version
At the geographical centre of MENA lies Egypt: a dichotomy of traditional, cash-driven transactions and a tech-savvy youth majority encouraging innovation of the country’s payment landscape. This week, we’re outlining its currency dynamics, remittances and payment regulations.
The long version
As the third largest economy in Africa, Egypt is fast becoming one of the most sought after expansion targets for international payments businesses around the world. Similarly to the Kingdom of Saudi Arabia (KSA), the Arab Republic of Egypt has ambitious goals set out in Vision 2030 (Arabic: رؤية مصر 2030). Egypt Vision 2030 highlights inclusive sustainable development based on three key pillars: economic, social and environmental. Such an approach is aligned with the United Nations Sustainable Development Goals (SDGs), and the Sustainable Development Strategy for Africa 2063. Specifically, the agenda has a keen focus on transforming the country into a leading financial center and a hot spot for foreign direct investment (FDI). Key investors in the region are the United Kingdom (UK), Belgium, the United States of America (USA) and the United Arab Emirates (UAE). FDI is keenly focused on the oil and gas industry, plus financial services and manufacturing.
The Egyptian Pound (EGP), the national currency of Egypt, has a long and diverse history. Unlike many other countries in the MENA region, EGP is not pegged to the US Dollar - the currency was allowed to free float from 2016, removing the USD peg that it had maintained for the previous 54 years. Despite the removal of the peg, funds often traverse Egypt in USD to counteract volatility imposed by rising inflation rates which, in January of this year, have surged as high as 40%.
Despite recent currency struggles, Egypt’s economy displayed resilience during the recent pandemic years - positioned as the only country in MENA to maintain a positive growth rate in 2020. Plus, it has a thriving and fast growing fintech community and is the fifth largest inbound remittance market in the world. Remittances are Egypt’s leading source of foreign currency, eclipsing both tourism and the Suez Canal. Based on 2021 data, it is calculated that the country relies on remittances for roughly 7.8% of its GDP. In 2021, over $31.5bn USD was remitted into the country, with the majority of in-flows from workers in the Gulf - with the bulk sent from KSA, Kuwait and the UAE. This strong connection to the Gulf Cooperation Council (GCC) means Egypt’s inbound remittances are increasingly affected by the movements in the global oil price.
Reviewing Egypt’s payment landscape, cash remains king with a large rural population and many individuals still unbanked. The banked population rate in Egypt sits at a low 35%, in contrast to the rest of MENA at a rate of 46% and the GCC at 78%.
This presents a significant opportunity for payment companies to continue to push technological development in the country. Similar to the UAE and KSA, the youth hold a strong majority of the local population. These tech-savvy Egyptians are looking for innovative ways to move money effortlessly, buy online and access instant payment options. Egypt’s substantial internet and mobile phone penetration of 71% and 93.4% respectively reveal positive indicators of the nation’s progress.
Digging into the data, Egyptian cash payments popularity is clear at 64% of the country’s total. This is followed by card payments (domestic and international) at 15%, digital wallets at 13%, plus bank transfers and debit cards at 4% respectively. As the tide slowly shifts towards modern payment methods, the opportunity for new payment players in the market must not be underestimated. Digital transformation has also been outlined in the Vision 2030 tech development goals across industries, meaning a consistent buy-in is expected from public and private sectors.
In May 2019, the Central Bank of Egypt (CBE) established a Regulatory Sandbox Framework. Similar to that in Saudi (see our recent article here), the sandbox is developed to inspire innovation and encourage entry of new Fintechs into the country. It allows new business models to be tested in the market without possible red tape associated with regulation. Plus, the Financial Regulatory Authority (FRA) is currently creating a sandbox for fintechs operating in the non-banking financial sector.
A snapshot of some key payments regulations in Egypt: Non-banks may provide payment services through payment system operators (“PSOs”) and payment service providers (“PSPs”). To distinguish, PSOs provide the underlying digital processes for payment transfers and settlements while PSPs ( include payment facilitators and aggregators) issue, send and receive payment instructions. To legally operate these services, PSOs and PSPs are required to obtain licences in line with the banking law.
Reviewing CBE regulations issued in 2019, two distinct payment services are important to define under the TPA and PF Regulations:
Technical Payment Aggregators (TPA)
Payment facilitators (PF)
A TPA is defined as “the provider on behalf of banks, of technological services to the sub merchants, including providing electronic collection services of bills and services, via the alternative delivery channels of the TPA such as POS, E-commerce and mobile wallets.” In addition, the PF are described as “the provider on behalf of banks, of financial and technological services for electronic collection, to the sub-merchants through the alternative delivery channels of the sub-merchants such as POS, Ecommerce, and mobile wallets.” TPA and PF operations are overseen by CBE and in line with their AML and anti-terrorist financing controls. The recent implementation of these regulations, plus the CBE's progress on developing an e-KYC system, enables safe and compliant innovative payment services in Egypt.
Egypt presents opportunities for payments that are promoted by supportive regulations and an innovative lens on sustainable economic development. With its geographical and economic ties to the rest of MENA, we see it as a strong hub in the region which should not be overlooked. Capturing the market early to support the local demand for digitization across the payments ecosystem is something that Fuse is excited about. Reach out to us if you’re interested in expanding your organisation’s reach into MENA.
As the third largest economy in Africa, Egypt is fast becoming one of the most sought after expansion targets for international payments businesses around the world. Similarly to the Kingdom of Saudi Arabia (KSA), the Arab Republic of Egypt has ambitious goals set out in Vision 2030 (Arabic: رؤية مصر 2030). Egypt Vision 2030 highlights inclusive sustainable development based on three key pillars: economic, social and environmental. Such an approach is aligned with the United Nations Sustainable Development Goals (SDGs), and the Sustainable Development Strategy for Africa 2063. Specifically, the agenda has a keen focus on transforming the country into a leading financial center and a hot spot for foreign direct investment (FDI). Key investors in the region are the United Kingdom (UK), Belgium, the United States of America (USA) and the United Arab Emirates (UAE). FDI is keenly focused on the oil and gas industry, plus financial services and manufacturing.
The Egyptian Pound (EGP), the national currency of Egypt, has a long and diverse history. Unlike many other countries in the MENA region, EGP is not pegged to the US Dollar - the currency was allowed to free float from 2016, removing the USD peg that it had maintained for the previous 54 years. Despite the removal of the peg, funds often traverse Egypt in USD to counteract volatility imposed by rising inflation rates which, in January of this year, have surged as high as 40%.
Despite recent currency struggles, Egypt’s economy displayed resilience during the recent pandemic years - positioned as the only country in MENA to maintain a positive growth rate in 2020. Plus, it has a thriving and fast growing fintech community and is the fifth largest inbound remittance market in the world. Remittances are Egypt’s leading source of foreign currency, eclipsing both tourism and the Suez Canal. Based on 2021 data, it is calculated that the country relies on remittances for roughly 7.8% of its GDP. In 2021, over $31.5bn USD was remitted into the country, with the majority of in-flows from workers in the Gulf - with the bulk sent from KSA, Kuwait and the UAE. This strong connection to the Gulf Cooperation Council (GCC) means Egypt’s inbound remittances are increasingly affected by the movements in the global oil price.
Reviewing Egypt’s payment landscape, cash remains king with a large rural population and many individuals still unbanked. The banked population rate in Egypt sits at a low 35%, in contrast to the rest of MENA at a rate of 46% and the GCC at 78%.
This presents a significant opportunity for payment companies to continue to push technological development in the country. Similar to the UAE and KSA, the youth hold a strong majority of the local population. These tech-savvy Egyptians are looking for innovative ways to move money effortlessly, buy online and access instant payment options. Egypt’s substantial internet and mobile phone penetration of 71% and 93.4% respectively reveal positive indicators of the nation’s progress.
Digging into the data, Egyptian cash payments popularity is clear at 64% of the country’s total. This is followed by card payments (domestic and international) at 15%, digital wallets at 13%, plus bank transfers and debit cards at 4% respectively. As the tide slowly shifts towards modern payment methods, the opportunity for new payment players in the market must not be underestimated. Digital transformation has also been outlined in the Vision 2030 tech development goals across industries, meaning a consistent buy-in is expected from public and private sectors.
In May 2019, the Central Bank of Egypt (CBE) established a Regulatory Sandbox Framework. Similar to that in Saudi (see our recent article here), the sandbox is developed to inspire innovation and encourage entry of new Fintechs into the country. It allows new business models to be tested in the market without possible red tape associated with regulation. Plus, the Financial Regulatory Authority (FRA) is currently creating a sandbox for fintechs operating in the non-banking financial sector.
A snapshot of some key payments regulations in Egypt: Non-banks may provide payment services through payment system operators (“PSOs”) and payment service providers (“PSPs”). To distinguish, PSOs provide the underlying digital processes for payment transfers and settlements while PSPs ( include payment facilitators and aggregators) issue, send and receive payment instructions. To legally operate these services, PSOs and PSPs are required to obtain licences in line with the banking law.
Reviewing CBE regulations issued in 2019, two distinct payment services are important to define under the TPA and PF Regulations:
Technical Payment Aggregators (TPA)
Payment facilitators (PF)
A TPA is defined as “the provider on behalf of banks, of technological services to the sub merchants, including providing electronic collection services of bills and services, via the alternative delivery channels of the TPA such as POS, E-commerce and mobile wallets.” In addition, the PF are described as “the provider on behalf of banks, of financial and technological services for electronic collection, to the sub-merchants through the alternative delivery channels of the sub-merchants such as POS, Ecommerce, and mobile wallets.” TPA and PF operations are overseen by CBE and in line with their AML and anti-terrorist financing controls. The recent implementation of these regulations, plus the CBE's progress on developing an e-KYC system, enables safe and compliant innovative payment services in Egypt.
Egypt presents opportunities for payments that are promoted by supportive regulations and an innovative lens on sustainable economic development. With its geographical and economic ties to the rest of MENA, we see it as a strong hub in the region which should not be overlooked. Capturing the market early to support the local demand for digitization across the payments ecosystem is something that Fuse is excited about. Reach out to us if you’re interested in expanding your organisation’s reach into MENA.
As the third largest economy in Africa, Egypt is fast becoming one of the most sought after expansion targets for international payments businesses around the world. Similarly to the Kingdom of Saudi Arabia (KSA), the Arab Republic of Egypt has ambitious goals set out in Vision 2030 (Arabic: رؤية مصر 2030). Egypt Vision 2030 highlights inclusive sustainable development based on three key pillars: economic, social and environmental. Such an approach is aligned with the United Nations Sustainable Development Goals (SDGs), and the Sustainable Development Strategy for Africa 2063. Specifically, the agenda has a keen focus on transforming the country into a leading financial center and a hot spot for foreign direct investment (FDI). Key investors in the region are the United Kingdom (UK), Belgium, the United States of America (USA) and the United Arab Emirates (UAE). FDI is keenly focused on the oil and gas industry, plus financial services and manufacturing.
The Egyptian Pound (EGP), the national currency of Egypt, has a long and diverse history. Unlike many other countries in the MENA region, EGP is not pegged to the US Dollar - the currency was allowed to free float from 2016, removing the USD peg that it had maintained for the previous 54 years. Despite the removal of the peg, funds often traverse Egypt in USD to counteract volatility imposed by rising inflation rates which, in January of this year, have surged as high as 40%.
Despite recent currency struggles, Egypt’s economy displayed resilience during the recent pandemic years - positioned as the only country in MENA to maintain a positive growth rate in 2020. Plus, it has a thriving and fast growing fintech community and is the fifth largest inbound remittance market in the world. Remittances are Egypt’s leading source of foreign currency, eclipsing both tourism and the Suez Canal. Based on 2021 data, it is calculated that the country relies on remittances for roughly 7.8% of its GDP. In 2021, over $31.5bn USD was remitted into the country, with the majority of in-flows from workers in the Gulf - with the bulk sent from KSA, Kuwait and the UAE. This strong connection to the Gulf Cooperation Council (GCC) means Egypt’s inbound remittances are increasingly affected by the movements in the global oil price.
Reviewing Egypt’s payment landscape, cash remains king with a large rural population and many individuals still unbanked. The banked population rate in Egypt sits at a low 35%, in contrast to the rest of MENA at a rate of 46% and the GCC at 78%.
This presents a significant opportunity for payment companies to continue to push technological development in the country. Similar to the UAE and KSA, the youth hold a strong majority of the local population. These tech-savvy Egyptians are looking for innovative ways to move money effortlessly, buy online and access instant payment options. Egypt’s substantial internet and mobile phone penetration of 71% and 93.4% respectively reveal positive indicators of the nation’s progress.
Digging into the data, Egyptian cash payments popularity is clear at 64% of the country’s total. This is followed by card payments (domestic and international) at 15%, digital wallets at 13%, plus bank transfers and debit cards at 4% respectively. As the tide slowly shifts towards modern payment methods, the opportunity for new payment players in the market must not be underestimated. Digital transformation has also been outlined in the Vision 2030 tech development goals across industries, meaning a consistent buy-in is expected from public and private sectors.
In May 2019, the Central Bank of Egypt (CBE) established a Regulatory Sandbox Framework. Similar to that in Saudi (see our recent article here), the sandbox is developed to inspire innovation and encourage entry of new Fintechs into the country. It allows new business models to be tested in the market without possible red tape associated with regulation. Plus, the Financial Regulatory Authority (FRA) is currently creating a sandbox for fintechs operating in the non-banking financial sector.
A snapshot of some key payments regulations in Egypt: Non-banks may provide payment services through payment system operators (“PSOs”) and payment service providers (“PSPs”). To distinguish, PSOs provide the underlying digital processes for payment transfers and settlements while PSPs ( include payment facilitators and aggregators) issue, send and receive payment instructions. To legally operate these services, PSOs and PSPs are required to obtain licences in line with the banking law.
Reviewing CBE regulations issued in 2019, two distinct payment services are important to define under the TPA and PF Regulations:
Technical Payment Aggregators (TPA)
Payment facilitators (PF)
A TPA is defined as “the provider on behalf of banks, of technological services to the sub merchants, including providing electronic collection services of bills and services, via the alternative delivery channels of the TPA such as POS, E-commerce and mobile wallets.” In addition, the PF are described as “the provider on behalf of banks, of financial and technological services for electronic collection, to the sub-merchants through the alternative delivery channels of the sub-merchants such as POS, Ecommerce, and mobile wallets.” TPA and PF operations are overseen by CBE and in line with their AML and anti-terrorist financing controls. The recent implementation of these regulations, plus the CBE's progress on developing an e-KYC system, enables safe and compliant innovative payment services in Egypt.
Egypt presents opportunities for payments that are promoted by supportive regulations and an innovative lens on sustainable economic development. With its geographical and economic ties to the rest of MENA, we see it as a strong hub in the region which should not be overlooked. Capturing the market early to support the local demand for digitization across the payments ecosystem is something that Fuse is excited about. Reach out to us if you’re interested in expanding your organisation’s reach into MENA.