25th of November 2020
The road to a cashless economy
The road to a cashless economy
By: Naila Ramsay, Dalia Abdelghany and Sara Seody
Keywords: Technology, Media & Telecommunication, Employment
Co-authored by Naila Ramsay, Dalia Abdelghany and Sara Seoudy.
In the context of promoting digital financial inclusion in Egypt and to move away from a cash based society, Law 18/ 2019 regulating the use of payments through cashless payment methods (the “Law”) was issued, followed by its executive regulation 1776/ 2020 issued by decree of the Prime Minister (the “ER”).
The Law makes it mandatory for most Egyptian businesses to settle certain payments by non-cash means, if they exceed a certain threshold. Deadline for compliance is 7 March 2021.
The Law is set to achieve several key goals, in particular, promoting financial inclusion and developing financial services whilst eliminating financial crimes, such as fraud.
The Law defines a cashless payment broadly and includes “any payment method that results in an addition to the beneficiary’s bank account such as deposits, transfers, credit and debit cards, payment via mobile telephones, and any other payment method approved by the governor of the Central Bank of Egypt (“CBE”)”.
The Law’s definition of a bank account includes Fawry e-wallets and e-wallets of mobile operators, such as Vodafone Cash and Orange Money.
Scope of application
The Law and ER apply to private sector companies, non-governmental organisations (“NGOs”), government authorities, public entities, companies owned in full or in majority by the state, and individuals dealing with these entities as set out below.
Cap for cash payments
The ER includes a list of maximum thresholds for certain payments, above which payment must mandatorily be made by non-cash means. We set out below some key examples.
To download a PDF of the complete list, please click here.
Reconciliation period
Both private and public sector entities have been given a grace period of six months from 8 September 2020 to install electronic payment facilities at their place of business as required to enable cashless payments. Unless extended, the grace period will end by 7 March 2021. The goal of the Egyptian government is to slowly phase out cash payments from day to day life.
Incentives
In order to promote cashless payment in the community, the Law provides several incentives:
- discounts of 5% to individuals opting for e-payment.
- refund of up to 3% to individuals opting for e-payment.
- a point system that entitles regular e-payment users to up to a 5% voucher.
Penalty for failure to comply
A penalty of 2% to 10% of the total amount of the transaction up to a maximum of EGP one million will be payable for noncompliance. The penalty will be doubled in case of repeated offences. The financial penalty also applies to any entity or person who divides the payment in several installments for the sole purpose of avoiding the legal threshold imposed by the ER. A manager can be held personally liable for the noncompliance by the company in certain circumstances. This is likely to occur if the manager is found to have been aware of the breach, failed in his management duties and such failure contributed to the breach. The legal entity will be jointly liable with the manager, if found guilty, in respect of any fines and compensation payable.
Stay informed
If you would like to stay informed about the Fintech and Payments and other topics relevant to the banking and payments sector, please subscribe to our dedicated Banking & Finance newsletter [Subscribe Now].
We are here to help. Feel free to reach out to our commercial, fintech & payments team if you have any questions or need assistance in navigating these difficult times.
To download the full article, click here.
Scope of application
The Law and ER apply to private sector companies, non-governmental organisations (“NGOs”), government authorities, public entities, companies owned in full or in majority by the state, and individuals dealing with these entities as set out below.
Cap for cash payments
The ER includes a list of maximum thresholds for certain payments, above which payment must mandatorily be made by non-cash means. We set out below some key examples.
To download a PDF of the complete list, please click here.
Reconciliation period
Both private and public sector entities have been given a grace period of six months from 8 September 2020 to install electronic payment facilities at their place of business as required to enable cashless payments. Unless extended, the grace period will end by 7 March 2021. The goal of the Egyptian government is to slowly phase out cash payments from day to day life.
Incentives
In order to promote cashless payment in the community, the Law provides several incentives:
- discounts of 5% to individuals opting for e-payment.
- refund of up to 3% to individuals opting for e-payment.
- a point system that entitles regular e-payment users to up to a 5% voucher.
Penalty for failure to comply
A penalty of 2% to 10% of the total amount of the transaction up to a maximum of EGP one million will be payable for noncompliance. The penalty will be doubled in case of repeated offences. The financial penalty also applies to any entity or person who divides the payment in several installments for the sole purpose of avoiding the legal threshold imposed by the ER. A manager can be held personally liable for the noncompliance by the company in certain circumstances. This is likely to occur if the manager is found to have been aware of the breach, failed in his management duties and such failure contributed to the breach. The legal entity will be jointly liable with the manager, if found guilty, in respect of any fines and compensation payable.
Stay informed
If you would like to stay informed about the Fintech and Payments and other topics relevant to the banking and payments sector, please subscribe to our dedicated Banking & Finance newsletter [Subscribe Now].
We are here to help. Feel free to reach out to our commercial, fintech & payments team if you have any questions or need assistance in navigating these difficult times.
To download the full article, click here.
The road to a cashless economy
25th of November 2020
By: Naila Ramsay, Dalia Abdelghany and Sara Seody
Co-authored by Naila Ramsay, Dalia Abdelghany and Sara Seoudy.
In the context of promoting digital financial inclusion in Egypt and to move away from a cash based society, Law 18/ 2019 regulating the use of payments through cashless payment methods (the “Law”) was issued, followed by its executive regulation 1776/ 2020 issued by decree of the Prime Minister (the “ER”).
The Law makes it mandatory for most Egyptian businesses to settle certain payments by non-cash means, if they exceed a certain threshold. Deadline for compliance is 7 March 2021.
The Law is set to achieve several key goals, in particular, promoting financial inclusion and developing financial services whilst eliminating financial crimes, such as fraud.
The Law defines a cashless payment broadly and includes “any payment method that results in an addition to the beneficiary’s bank account such as deposits, transfers, credit and debit cards, payment via mobile telephones, and any other payment method approved by the governor of the Central Bank of Egypt (“CBE”)”.
The Law’s definition of a bank account includes Fawry e-wallets and e-wallets of mobile operators, such as Vodafone Cash and Orange Money.
Scope of application
The Law and ER apply to private sector companies, non-governmental organisations (“NGOs”), government authorities, public entities, companies owned in full or in majority by the state, and individuals dealing with these entities as set out below.
Cap for cash payments
The ER includes a list of maximum thresholds for certain payments, above which payment must mandatorily be made by non-cash means. We set out below some key examples.
To download a PDF of the complete list, please click here.
Reconciliation period
Both private and public sector entities have been given a grace period of six months from 8 September 2020 to install electronic payment facilities at their place of business as required to enable cashless payments. Unless extended, the grace period will end by 7 March 2021. The goal of the Egyptian government is to slowly phase out cash payments from day to day life.
Incentives
In order to promote cashless payment in the community, the Law provides several incentives:
- discounts of 5% to individuals opting for e-payment.
- refund of up to 3% to individuals opting for e-payment.
- a point system that entitles regular e-payment users to up to a 5% voucher.
Penalty for failure to comply
A penalty of 2% to 10% of the total amount of the transaction up to a maximum of EGP one million will be payable for noncompliance. The penalty will be doubled in case of repeated offences. The financial penalty also applies to any entity or person who divides the payment in several installments for the sole purpose of avoiding the legal threshold imposed by the ER. A manager can be held personally liable for the noncompliance by the company in certain circumstances. This is likely to occur if the manager is found to have been aware of the breach, failed in his management duties and such failure contributed to the breach. The legal entity will be jointly liable with the manager, if found guilty, in respect of any fines and compensation payable.
Stay informed
If you would like to stay informed about the Fintech and Payments and other topics relevant to the banking and payments sector, please subscribe to our dedicated Banking & Finance newsletter [Subscribe Now].
We are here to help. Feel free to reach out to our commercial, fintech & payments team if you have any questions or need assistance in navigating these difficult times.
To download the full article, click here.
Scope of application
The Law and ER apply to private sector companies, non-governmental organisations (“NGOs”), government authorities, public entities, companies owned in full or in majority by the state, and individuals dealing with these entities as set out below.
Cap for cash payments
The ER includes a list of maximum thresholds for certain payments, above which payment must mandatorily be made by non-cash means. We set out below some key examples.
To download a PDF of the complete list, please click here.
Reconciliation period
Both private and public sector entities have been given a grace period of six months from 8 September 2020 to install electronic payment facilities at their place of business as required to enable cashless payments. Unless extended, the grace period will end by 7 March 2021. The goal of the Egyptian government is to slowly phase out cash payments from day to day life.
Incentives
In order to promote cashless payment in the community, the Law provides several incentives:
- discounts of 5% to individuals opting for e-payment.
- refund of up to 3% to individuals opting for e-payment.
- a point system that entitles regular e-payment users to up to a 5% voucher.
Penalty for failure to comply
A penalty of 2% to 10% of the total amount of the transaction up to a maximum of EGP one million will be payable for noncompliance. The penalty will be doubled in case of repeated offences. The financial penalty also applies to any entity or person who divides the payment in several installments for the sole purpose of avoiding the legal threshold imposed by the ER. A manager can be held personally liable for the noncompliance by the company in certain circumstances. This is likely to occur if the manager is found to have been aware of the breach, failed in his management duties and such failure contributed to the breach. The legal entity will be jointly liable with the manager, if found guilty, in respect of any fines and compensation payable.
Stay informed
If you would like to stay informed about the Fintech and Payments and other topics relevant to the banking and payments sector, please subscribe to our dedicated Banking & Finance newsletter [Subscribe Now].
We are here to help. Feel free to reach out to our commercial, fintech & payments team if you have any questions or need assistance in navigating these difficult times.
To download the full article, click here.
