President Abdel Fattah Al-Sisi approved last week the new law regulating non-cash payments entering into force since Wednesday.
The president’s decree stipulated that the prime minister shall issue the executive regulations of the law upon the proposal of the minister of finance and the approval of the governor of the Central Bank of Egypt (CBE) and the cabinet within six months from the date of its issuance. Until the regulations are issued, the current laws which do not contradict with the new law shall remain in force.
The president also ordered all those subject to the law to adjust their situation so that they can comply with its provisions within six months of issuing its regulations. The cabinet may, upon the proposal of the minister of finance and the approval of the CBE governor, extend this period or exclude certain geographic regions from the law, in whole or in part, for a certain period for national security reasons or in case of force majeure or other emergency situations.
The law obliges all state authorities, institutions, and establishments which provide their services to the public and administer public facilities to provide e-payment methods.
The question posed by Daily News Egypt here is whether the market is ready to implement this law, after its entry into force, and is the technological infrastructure ready or not?
According to the Director General of Visa in North Africa, Ahmed Gaber, the law establishes a new phase in the dissemination of electoral payments culture, and emphasises the extent of the state’s interest in them and their awareness of their importance and impact on the economy and transparency of the financial system.
He added that Visa is working with its financial institution customers to expand the scope of accepting digital payments and offer mobile payment solutions and services, such as Scan to Pay, to provide ways of accepting digital payments and their multiple options.
He pointed out that for the Egyptian economy, electronic payments, if widely implemented, will contribute toward saving paper and hard copies within the government, and will give customers the advantage of receiving their benefits almost immediately, instead of waiting for the cheques operations, which will accelerate the pace of business completion, collection cycle, and liquidity ratio.
“The expansion in the scope of electronic payments will also reflect a reduction in the cost of government execution of several projects, primarily the cost of fuel subsidies and the cost of cash management. Moreover, e-commerce is largely associated with electronic payment systems which will contribute toward reducing the size of parallel economies,” Gaber said.
Furthermore, he stressed that infrastructure in Egypt is conducive to the dissemination of digital payments, especially with the government’s clear intention to do so, and Visa’s efforts and its customers from financial institutions to provide solutions and services which facilitate them.
He pointed out the recent partnership between Visa, Banque Misr, and ExxonMobil Egypt to launch a unique strategic partnership in order to expand the acceptance of e-payments and the provision of electronic payment services for petroleum services, through 100 ExxonMobil stations as a primary stage in a bid to further financial inclusion.
This strategic partnership aims to enable Visa cardholders to use their cards at ExxonMobil stations, and to expand the acceptance of electronic payments at these stations, he added. He added that Banque Misr is pushing this partnership forward through the deployment of electronic payment acceptance machines at petroleum stations, and design loyalty programmes for card users and holders.
“This partnership is a strong example of the combined efforts of leading institutions such as Banque Misr, Visa, and ExxonMobil Egypt, to contribute to financial inclusion and expand the acceptance of electronic payments, allowing increased benefits for traders, consumers, and the Egyptian economy as a whole,” he said.
Gaber added that Visa is continuing its cooperation with the Federation of Egyptian Chambers of Commerce (FEDCOC) and is expanding the scope of this cooperation by reaching out to various segments of traders under the federation’s umbrella, which carries out various activities aimed at serving these merchants in particular, and the community in general.
He pointed out that the cooperation with the FEDCOC comes within the framework of the important agreement signed by Visa at the end of 2016, which reflects the company’s recognition of the importance of the federation, which includes more than four million trade members, meaning there is a huge segment which can work with Visa to expand the acceptance of digital payments in the Egyptian market.
The CBE Sub Governor for Payment Systems and Information Technology, Ayman Hussein, said in previous statements that the legislation focus is one of the most important axes of transitioning toward a society less dependent on cash.
He pointed out that this framework includes the law for the development of non-cash financial transactions, which was adopted by the National Payments Council and approved last week, as well as the amendment of the CBE and Banks Law No. 88 of 2003, which includes a dedicated section for payment systems within this framework. The CBE will also be enabled to extend its supervisory role over e-payment companies and non-banking facilities which provide payments solutions.
Hussein pointed out that the implementation of the new law will be phased in, stressing that the infrastructure necessary to implement it has become fully qualified, and that its implementation will not cost the citizen any financial burdens or additional costs because it requires those who provide public services to the public or manage public facilities to provide means of acceptance for non-cash payment at all service collect points for no additional cost.
The law regulating the non-cash means of payment consists of nine articles regulating the electronic payment process, its controls, and penalties violated by its provisions.
Non-cash payment means refers to any mode of payments resulting in an addition to one of the beneficiary’s bank accounts such as deposit, transfer, and debit orders, credit and debit cards, payment by mobile phone or other means approved by the Governor of the Central Bank of Egypt.
A bank account is a contract under which a natural or legal person agrees with a bank registered with the CBE, or one of the entities authorised to initiate the deposit or credit activity in Egypt to open an account. This is then used to record all transactions for payment, receipt, and settlement of mutual payments in cash or through electronic cash units, such as a current account, a savings account, a time deposit account, a mobile payment account, credit cards, and prepaid card accounts.
All state authorities and entities, public corporate entities and companies which the state owns all or most of its capital shall be obliged to pay the financial dues of their members and employees, experts, chairpersons and members of boards of directors, committees, and social insurance contributions by non-cash means of payment, excluding foreign travel compensations.
It also stipulates that private legal persons and establishments of various kinds shall be obliged to pay the dues of their employees, experts, chairpersons, and members of the boards of directors, committees, and social security contributions by non-cash means of payment, when employee numbers and their total monthly wages exceed the limits specified in the executive regulations.
Authorities, state bodies, legal persons and enterprises provided for in Article 2 of the law shall be obliged to pay by non-cash means of payment, if the value exceeds the limits specified in the executive regulations of this law in the following cases:
Repayment of receivables from suppliers, contractors, service providers, and other contractors.
Granting cash financing
Distribution of profits resulting from the contribution to the capital of companies or from investment funds.
Payment of dues of the members of trade unions and entitlements of participants in private insurance funds participating in special insurance funds and insurance compensation.
The disbursement of donations and aid by associations and institutions working in the field of civil work or other legal persons or establishments provided for in Article 2 of this law.
Payment of the dues in the cases of purchase, lease, exploitation or use of land or real estate, or express transport vehicles by the authorities and state bodies and legal persons and the facilities provided for in Article 2 of the law.
A decision by the prime minister on the proposal of the minister of finance and the approval of the governor of the Central Bank of Egypt may add additional payments to be paid by non-cash means of payment.
The authorities and state bodies, legal persons, and establishments providing public services to the public shall be responsible for the administration of public facilities by providing means of acceptance for non-cash payment to their clients at all ports of collection for service without additional cost, as set out in the executive regulations of this law.
This shall be without prejudice to the possibility of additional charge for the provision of the services referred to by electronic means if the performance of the service is linked to delivery to the recipient.
The following payments shall be collected by non-cash means of payment when their value exceeds the limits specified in the executive regulations of this law:
Taxes, customs, duties, and fines.
For services and amounts due to the entities stipulated in Article 4 of this law.
Cash financing premiums, insurance premiums, union subscriptions, and private insurance fund contributions.
Subsidies and donations received by associations and institutions working in the field of civil work or other legal persons or establishments provided for in Article 2 of this law.
Collecting the proceeds in cases of sale, rent, exploitation or use of land, real estate, or express transport vehicles by the authorities and state bodies, and the legal persons and establishments stipulated in Article 2 of this law.
The minister of finance and the Governor of the Central Bank of Egypt may, upon a decision by the prime minister, add additional payments to be collected by non-cash means of payment.
The powers, state bodies and public legal persons dealing with the public after the approval of the minister of finance may grant positive incentives for payment by means of non-cash means of remuneration, including the reduction or refund of the amounts paid to them in this means.
The executive regulations of this law shall determine the manner and rules of granting such incentives.
Violators shall be punished by a fine of not less than 2% of the value of the amount paid in cash and not exceeding 10% of the value of this amount, and a maximum of EGP 1m, for whoever violates the provisions of Articles 2, 3 and 5 of this law.
The same penalty shall be imposed upon anyone who has broken down the payments in order to circumvent the application of the limits prescribed by this law.
Any person who contravenes the provisions of Article 4 of the first paragraph of this law shall be liable to a fine of not less than EGP 100,000, and not exceeding EGP 300,000. The fines in this article shall be doubled in case of re-committing.
Without prejudice to the criminal liability of natural persons, the person responsible for the actual administration of the legal person shall be punished by the same penalties prescribed for acts committed in violation of the provisions of this law–if he is aware of them.
The legal person shall be responsible in solidarity with the convicted person for the discharge of such penalties as financial sanctions and compensation in this case.
The proceeds of the fines provided for in Article 7 of this law shall be transferred to an account in the unified treasury account of the ministry of finance, and shall be allocated to support efforts to provide the infrastructure of non-cash means of payment to government bodies, and raise the awareness of citizens by these means.
This account shall be managed and disbursed from according to the rules specified in the executive regulations of this law, provided that the surplus of the funds of this account shall be transferred from one fiscal year to another.