CAIRO: When Tarek Elhousseiny took the helms at Egypt's Visa office in 2003, the company had already been working with banks for almost a decade to introduce electronic forms of payment to the market. Today, as the vice president and general manager of Visa's operations in Egypt and north and west Africa, Elhousseiny says there is an upward trend on all products, with volumes growing in "a very encouraging way. Upon entering the market in the 90s, Visa focused on working with banks to develop a reliable acceptance infrastructure, namely on the point of sale (POS) - or merchant acceptance - and ATM acceptance. The goal was to facilitate the process of spending money for the influx of tourists. But in 2003, the industry took a different turn. "There was a strong view among banks that we also need to develop the domestic market, Elhousseiny said, "so Egyptians can also rely on electronic payments for their purchases locally and internationally. Since then, the industry as a whole has flourished from a volume of around $500 million to beyond $5 billion today. "Consumers' reliance on electronic payment in general, and Visa in particular.is on an upward trend, Elhousseiny said. While recognizing the successful development of the industry, Elhousseiny sets his goals higher, saying that the Egyptian market has "huge potential. "We haven't even realized 20 percent of the [Egyptian] market yet. The company's financial results for the third quarter of fiscal year 2008 show that the number of Visa cards in Egypt - both credit and debit - increased by 40 percent, with Egypt accounting for 9 percent of the total Visa cards in the region. Visa credit cards in Egypt increased by 24 percent, while debit cards were up 61 percent. The results also show a 41 percent year-on-year increase in the number of Visa transactions in Egypt as well as a 42 percent increase in the value of these transactions, reaching almost $1.5 billion. "Is this enough? Of course not. We have big plans in Egypt and we're sure it's going to continue the growth trends, he said. Tackling the slowdown In the face of the global economic crisis, Elhousseiny will not venture a guess as to how deeply the slowdown will impact Egypt, let alone Visa's electronic payment business in the country. He did say, however, that "the impact of the economic crisis on emerging markets and particularly on Egypt was not as severe as it was in a lot of other markets. Of course, like any other market on the planet, it was impacted; but, if you look at financial institutions or the banks situation, the loan-to-deposit ratio was more on the deposit side. "From a liquidity point of view, there is no impact. But indeed it is slowing down the engine across the board, across industries including the industry where we are and for the customers that we serve, he said. Their strategy to deal with the uncertainties of the coming period is a simple one: keep an eye on the market and tailor products to meet consumer needs. "The bumpy journey is a long one and I think we're just at the very beginning. .We will work with our clients, the banks, to deliver any alteration in products to serve the market better during this difficult time, Elhousseiny said. Another priority is to "help banks make sure they are well protected against fraud . [and] on the usage side, to work with banks to improve efficiency rates. To make sure that every time a card is inserted in the ATM, cash comes out; that ATMs are up and running, same thing on POS. The coming period will also see Visa introduce more debit products as well as a number of co-brand cards. Due to the financial slowdown, "some of those plans will be deferred to a later part of next year, but all the new product launches will happen within the financial year, he said. Co-brand cards see banks partner with retail stores, mobile operators and even malls to offer branded electronic payment cards, in this case from Visa. One of their better known co-brand cards was issued in partnership with the National Bank of Egypt and CityStars Mall. There are also co-brand products with Mobinil and Banque Misr. In its continuous efforts to develop the acceptance infrastructure, Visa is working on introducing GPRS acceptance in remote areas where land lines are unavailable. This allows the POS to work on a GPRS in areas such as Upper Egypt or on cruise ships, for example. Educating consumers One of the key factors to the industry's success is "nurturing credit responsible consumers, said Elhousseiny, an awareness campaign which Visa launched last year and will relaunch next year. "The intention is not to issue credit to everyone. We want to help institutions issue credit based on informed decisions, said Elhousseiny. The first step was to work with banks and regulators to establish Egypt's first private credit bureau, i-Score, which launched earlier this year. The next step is "to make sure consumers understand the importance of credit, said Elhousseiny. "It's got its pros and cons . and we're trying to make sure that credit is not misused in terms of offering and in terms of usage. Visa's campaign aims to educate consumers about what they should pay for with a credit card, what to put on a debit card, how to watch interest rates and how to manage receivables. Meanwhile, the credit bureau will look at the entire market to see how credit lines are performing in terms of extension, usage and repayment. It has been operating for less than a year, and there's still work to be done to standardize and build up the date, he said. "It should take up to three years maximum until we have a fully fledged credit bureau that encompasses every credit activity on the consumer side and the SME side, predicted Elhousseiny. Some of its expected results will be to reduce non-performing loans and help ease the decision of credit extension and thereby the issuance of credit products in the market. "It is there to encompass every single consumer and line of credit in the market; to look at the management and default rates of each line, and generate reports and data that looks at every industry, each line of credit and evaluate it's performance, he explained. Regarding default rates, Elhousseiny said that based on a number of samples, Egypt's rates are in line with the rest of the region and similar markets. Default rates on "credit cards are within the normal, and in some cases they're even tightly managed, he said, "They are way below 4 percent, and this is a very strong number on credit cards. Protecting the market from fraud is vital to the health of the industry. Visa recently participated in Egypt's National Fraud Forum, which creates a platform for issuers and acquirers to share market data, in particular, instances where fraud has been spotted. "Fraud is not a static act; it travels the same way money travels, he said. At the forum, participants shared patterns of fraud in other markets so that Egypt's players are aware of what's happening elsewhere, a key tool in combating fraud. "The fraud rate for payment cards issued in Egypt remains lower than both the global and regional average, he said. Participants also discuss policies and regulations that were or will be introduced in different markets. "The other component of the forum is that we bring to the table the Fraud Prevention Police, which is under the authority of the Ministry of Interior. They are very switched in . we work with them to make sure that the awareness of different patterns of fraud are with authorities as well as institutions, he said. To young credit card users, Elhousseiny's advice is to make sure before you get credit, you know where it's going to be spent. With a credit card in hand, "make sure you purchase something you really need, and the only way to purchase it is through a credit card - not to dine or for entertainment - but something that you'll put some short-term investment on, he said. "Make sure there is a clear plan for repayment and that it is strictly followed. Defaulting on a loan is the worst thing that could ever happen, and with the system and the data available now, if anyone defaults on the loan, their credit worthiness deteriorates and it'll become extremely difficult to build it back.
