FinTech may often seem dynamic on an almost daily basis. Technology is transforming how consumers live and work, and how businesses establish products and services for the digital economy, as well as governments procedure when developing cities that are inspirational, habitable, and encompass all segments of society.
On the second day of the annual Mastercard ‘Connecting Tomorrow’ forum in Barcelona, Daily News Egypt sat with Mastercard General Manager Egypt and North Africa Magdy Hassan, to run through his vision of the industry’s latest updates, and how innovation can alter the way people receive their incomes, as well as how they utilise the money. DNE’s interview transcript for which is below, lightly edited for clarity:
“We believe that it is an important milestone to drive the mindset culture of innovation. Innovation is the key of any sustainable business in the future, as we strongly believe that innovation is common in industries, and that is why Mastercard is taking a leadership role, and bringing around 300 of its customers around the Middle East and Africa, to pinpoint a clear example of the importance of innovation, and the role that Mastercard can play to innovate its business and future perspectives,” Hassan explained
Mastercard is cooperating with the Egyptian government in the payroll system. What is the importance of this partnership and how can it develop into an enhanced automated system?
Mastercard is applying a holistic approach in the way it conducts business in any market. For example, in Egypt, we are not only focusing on traditional customers such as financial institutions and banks, but we are also addressing all stakeholders to improve their performance. It is our belief system, that payment is a complete ecosphere and Mastercard is implementing the role of connecting all stakeholders to develop an efficient payment ecosystem. The stakeholders include the financial institutions and the government. The government is important because it is the policymaker and drives and shapes how affairs are operating in the country.
If we take the government initiative regarding electronic payment, the objective is mainly to enforce financial inclusion, and shift from cash payment to electronic payment. Therefore, the government is working hard to implement that shift, and we at Mastercard support the country in achieving that goal.
When Mastercard automated its payroll in Egypt, there were 6 million employees who were receiving their salaries in cash, but currently about 5.5 million receive their salaries electronically.
We customised this infrastructure in cooperation with the Central Bank of Egypt (CBE). We aim to improve people’s lifestyles by paying them electronically, without them having to go anywhere, and this can be accomplished through mobile transactions which also facilitate e-commerce.
We empower the Egyptian government in it collection of taxes and customs, hence so Mastercard is profiting in two ways; we’ve observed that almost the majority of Egyptians currently are moving towards electronic payment, as well as commerce and e-commerce payment.
This is an example of the cooperation with the Egyptian government in electronic payment, however I’m sure that there will be significant cooperation in the future as Mastercard is working on developing smart cities.
We are currently engaged in around 100 cities worldwide, in order to offer them to efficient and smart solutions to manage the smart cities. We know that Egypt is moving towards establishing a New Administrative Capital, and this is a national project which we are prepared to support the government with, as we always declare during discussions with the Egyptian government in this term and context.
In this regard, we cooperated with the United Kingdom’s metro and we changed the system, and put forth solutions in order to access the metro as an open globe infrastructure using Mastercard’s contact list technology, to enact the purchase instantly, and access the metro as well. This had a significant impact in reducing costs by £100m in annual expenses.
Cash represents 98% of the daily transactions taking place in Egypt. Is Egypt ready to transform into electronic payment?
Mastercard’s global objective is how to convert cash payments into electronic payments, and if we take Egypt as an example, it represents a very low electronic percentage currently at 2%. However, Egypt is qualified to accelerate quickly towards much faster cash disbursement due to the varieties of payment solutions Mastercard introduced in Egypt and the obvious government momentum to push electronic payment forward.
How is this beneficial in developing the economy and addressing corruption?
We are not just addressing payment objectives but also improving government efficiency and increasing transparency as well. When transparency exists, corruption will disappear as corruption thrives on concealment, but electronic transactions do not have so-called dark sides.
Hence, this ecosphere will help achieve transparency and track consumer behaviour in terms of efficiency. For example, a global organisation such as the World Bank takes into consideration the electronic payment percentage in order to classify the market rank in terms of ease of conducting business, so as far as the market moves increasingly more towards electronic payment, this raises the ranking of similar indices.
The Egyptian government and the CBE have been recently focusing on financial inclusion. What is the current percentage of financial penetration in Egypt and the targeted one?
There are several ways to discuss this and elaborate on electronic payment versus the cash payment, which is currently very low. However, another direction we could take is what is the percentage of empowered people who could pay electronically, and this percentage is not bad when I state that Mastercard empowered 25% of the population with Mastercard solutions and services whether cards, mobiles or quick response (QR) code technology. Therefore, there is a variety of solutions that Mastercard could bring to the market, and all of these can empower consumer if we look at from this perspective. Thus, the empowerment context could represent a reasonable percentage.
The first step is empowering people and the next step is applying this empowerment through changing behaviour. Furthermore, Egypt is a very huge market in remittances as well, so Mastercard has solutions to empower this sector as well. Moreover, we are very optimistic regarding Egypt’s future prospects.
What is the importance and benefit of a cashless society? Did Mastercard integrate the concept in countries similar to Egypt? Did it work out fine?
We have worked with 210 countries around the globe and we provided solutions far and wide for all the institutions we have worked with. I think that the level of a market’s maturity is important as well as several factors of this kind, and as we previously said that Mastercard solutions provide different solutions and address the needs for different categories. The government’s strategy and how the government improves this, and the banks’ maturity, and how eager they are to implement this and to apply awareness campaigns.
The demand and the impetus are there, and the government has a clear vision of where it wants to develop. In Dubai, the United Arab Emirates, for example, you will find their market is mature since the merchant and retail acceptance has been developed faster than Egypt. However, the acceleration throughout the Middle East and African markets, where the potential is huge, it becomes one of the developing markets and it is already in line.
What is the importance of Egypt to Mastercard?
Egypt for Mastercard is definitely one of the key markets in Middle East and Africa (MEA) region, because of its population, and how quickly Egyptians have adopted technology, and they always have an increased appetite for novel technology as Egyptians are one of the highest internet users in the MEA, so this is a main and clear indicator of the benefits of this market, and it is expanding and absorbing technology in general, and innovative payment solutions.
In addition, the current stability and safety in the country reveals that the market is heading in the right direction, and the drive that the CBE is bringing to promote electronic payments is definitely a clear sign of encouragement for us about the future of this country. So, we have been investing in this market, and while everyone was doubting the future of the country during the turmoil period, so with such progressive improvement we are optimistic about the future of the Egyptian market.
We have several indications that Mastercard has a pioneering role in Egypt. Mastercard was the first to establish the mobile platform in Egypt in 2013. Furthermore, Mastercard introduced to Egypt the e-commerce payment gateway, that is currently prevailing in Egypt. Every single payment is paid via the internet presently, due to Mastercard platform, and Mastercard gateway. When we talk about technology such as QRs, mobiles, Mastercard laid the groundwork and were the innovators in the Egyptian market and the first to introduce these solutions.
In just three years, we added about 7m mobile wallet, which means that we empowered 7m people, and most likely they previously had no way to pay electronically; currently 25% of the population was empowered by Mastercard.
Mobile penetration rates in Egypt exceed 100%. In your opinion, what kind of opportunities does this present for the country’s digital economy?
It is a great opportunity for Mastercard and that is why Mastercard established in Egypt the global first interoperable mobile payment solution. We got through to about 7 million people, so as far as people are using mobile phones, then we have several opportunities to reach everyone to empower them for doing digital payment. Actually, our vision is that everyone who possesses a national ID must have a payment service.
Can you tell us about Mastercard’s role in empowering small and medium-sized enterprises (SMEs) in Egypt?
We are focusing on addressing all segment needs for example we presented a first-of-its-kind solution to serve SME and agriculture sectors. We innovate based of their needs and demands, and we have seen a clear need in the SMEs market, which is considered fundamental for any economy, and is a motivating factor in terms of employment and efficiently developing the economy. SMEs support about 80% of the economy, which is why we are focusing on this segment and its needs.
When we carefully analysed their needs, we discovered that their main requirements were access to lending while they can’t be qualified for formal lending due to the absence of financial records. The solution empowers SMEs to accept payment, can also currently pay for their supplies electronically, while building necessary data to enable banks to assess and help SMEs based on their needs, and grant them access to finance efficiently.
Our vision is to connect people to the digital platform where electronic payment becomes a part of daily life.
Moreover, Egypt has one of the largest SMEs markets and the government is focusing on this very much.
What kind of technologies does Mastercard use for the security of its customers? Can you tell us more about Mastercard anti-fraud system of?
The anti-fraud solution is quite critical and one of the main key solutions for Mastercard. In 2014, a national fraud solution—the first of its kind—was developed by Mastercard to prevent any unauthorised transactions to protect the country and its security.
Today, across the Middle East and Africa, there was a 27-fold increase in contactless transactions in 2017, with the volume spent growing 18-fold.
In March, Mastercard announced an initiative to create greater payment consistency by developing the ‘tap and go’ standard in the next five years.
Starting 2018, Mastercard requires a series of card and terminal upgrades throughout the Middle East, Africa, Europe, Latin America, and Asia Pacific, to bring secure and convenient contactless card payment technology to more people in further locations worldwide.
