Is Fintech beneficial to society? Why are people so keen to go cashless?

Any given night out in Egypt with a large group ends the same way. There is always one unfortunate member of your table bent over the bill and furiously counting notes. The rest of your friends are either sitting back in smug satisfaction for having paid the exact amount, or they’re anxiously waiting for the allocated bill calculator to hand them back their expected change. Sound familiar?

Photo Via: Getty Images

It’s safe to say that Egypt is still a largely cash-based society. Most restaurants and bars refuse card payment. Many people still pay their utility bills and bowab fees in cash.

I would be the first to say, it can be a little annoying.

The Drive to go Cashless

Several initiatives have been led by different organizations of varying success to encourage Egyptians to stop using cash.

According to Ahram Online, one of the most recent of such initiatives was motivated by the onset of Covid. This initiative was spearheaded by the Central Bank of Egypt, which introduced new policies to encourage people to stop handling and exchanging notes. Apparently, this initiative was all in service of curbing the spread of infections.

Photo Via: Roads and Kingdoms

As a result, The Central Bank of Egypt asked local financial service providers to encourage their clients to use digital transactions. Moreover, they increased the limits of transactions that their customers were able to make using mobile wallets.

Has the pandemic affected cashless transactions?

This initiative, along with other factors associated with the pandemic, apparently had a huge effect on people’s spending habits. The NRTA reported that recorded transactions from one e-wallet to another increased by 224%, from 1.2 million in March to 3.8 million in October 2020. These platforms were used to pay utility bills, pay employees, donate to charitable organizations, and online shop.

This trend of going cashless has been on a sharp rise in recent years. Despite the numerous efforts to encourage people to stop relying on cash only, McKinsey & Co. released research as recent as 2017 that revealed only 2% of all transactions in Egypt were cashless. 

Why are people reluctant to go cashless?

In 2018, the American Chamber of Commerce in Egypt wrote an article explaining why Egyptians still largely relied on cash payments. The main stated reasons were:

• Lack of infrastructure to support cashless payments
• Fear of fraud
• Distrust of banks

Image Via: Ahram Online h

This distrust of banks has been a huge deterrent for those with the ability to set up bank accounts. In April 2018, the World Bank calculated that of the 64.7 million in Egypt eligible, only 32.8% of them have bank accounts.

So why do people care about bank accounts?

According to the American Chamber of Commerce, the Egyptian Government has been trying to encourage its citizens to go cashless to create a more stable financial system.

In fact, Ahram reported that President El-Sisi voiced his intentions during a meeting on Monday, April 12, 2021, to focus more squarely on data digitalization. He emphasized the importance of providing more accessible internet, mobile and banking services to Egyptians across the country.

A cashless economy is a crucial facet of the second objective of the Ministry of Planning and Economic Development’s Vision 2030 plan. Explicitly, the second of the eight stated objectives, entitled “Justice, Social Inclusion and Engagement,” is concerned with the promotion of financial inclusion.

What’s financial inclusion?

The importance of financial inclusion is notoriously difficult to describe. Although the UNDP states financial inclusion as one of its key objectives, it only describes its desired outcome as: “not an end goal, but a means to multiple ends.”

These “multiple ends” they’re aiming to achieve can range from increased gender equality to the preservation of small local businesses, to decreasing the wealth gap. Indeed, those most poorly affected by reliance on cash are invariably lower-income communities. According to the UNDP, achieving financial inclusion will allow: “low-income account holders to engage in the economy to meet their daily needs and to improve their skills, productivity and marketability in the digital-economy age”

Photo Via: Egyptian Streets (credited Marwa Morgan)

Moreover, according to the Corporate Financial Institute, the growing digital economy presents a pivotal moment for those deciding to set up bank accounts. As most financial services continue to move online, they become increasingly unavailable to communities that rely on cash.

How Fintech and the startup scene in Egypt is involved

Egypt is home to a thriving startup scene, and many budding fintech companies are aiming to bridge these gaps in access. In particular, we wanted to shine a spotlight on two fintech groups working to make digital transactions and financial services much more convenient and accessible to the wider community.

Telda

The co-founder and former chief technology officer of Swvl, Ahmed Sabbah, announced in a social media post in March 2021 that he was leaving the company to pursue another project.

The company has gone from strength to strength, drowning out competition from international tech giants like Uber – who launched their alternative in Cairo, Uber Bus, in July 2020.

For all the success that Swvl has enjoyed, it was hard to imagine why Sabbah would want to leave the company. Until April 13, 2021 – as he and his team announced the launch of their new startup: Telda.

Telda is a digitalized financial transaction app similar to Europe’s Paypal and the United States’ Venmo. It will allow for users to automatically request, send and receive money from each other directly with the click of a button. The company released a statement that using Telda will make sending payments “as easy as sending a WhatsApp message.” Users may also rely on the app to transfer money to their savings accounts, buy products in-store, and withdraw cash from certain Telda compliant ATMs.

To sign up, you must create an account with your phone and National ID number and Telda will then deliver their special Mastercard-powered debit card to your door, and you’re off!

Paymob

Paymob is a fintech startup that facilitates transactions for small businesses. The service allows business owners to build digital wallets into their apps so that they can easily solicit payments from their customer base. The features of the platform include support for in-store payments, options to set up automatic payments to subscribe, and more.

Paymob Founders: Islam Shawky, Alain El-Hajj, and Mostafa Menessy. Image Via: MO4 Network

With the increasing frequency of cashless payments in Egypt during the pandemic, it’s unsurprising they’ve done so well. Paymob released a statement recently revealing that the revenue for payment acceptance went up 5x during 2020.

As a result of their success, they have expanded into Kenya, Palestine, and Pakistan and have 35,000 users. These users include big names like SWVL, LG Samsonite, and the AUC in Egypt.

According to Menabytes, Paymob has recently raised $18.5 million in their Series A round led by Global Ventures! 

That makes it the largest ever Series A round closed by a fintech group in Egypt.

Not only does this spell success for the company, which means you’ll likely be seeing a lot more of them around, but they’ve also voiced their intentions to expand into Saudi.

Why is this important?

Although at vastly different stages in expansion, it’s important to consider the potential social good these companies could do for the Egyptian population (as well as making it  If fintech does indeed promote financial inclusivity – as the Corporate Financial Institute postulates – then this could mean more support for small businesses around Egypt!