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NEW SCHEME TO AUTOMATE BILL PAYMENTS
BY ABDEL AZIZ NOSSEIR
While automated bill payment is nothing new to Egypt, it has never caught on simply because the Kafkaesque procedures involved usually outweigh the convenience gained. The biggest problem has always been the lack of a universal system able to automatically process bill, salary or pension payments. Simply put, banks could never agree among themselves, or with their commercial clients, on how automatic bill payments should function.
“The process involving people, transportation, security, counting cash, standing in lines is no [longer] efficient,” says Ulbe Spaans, managing director of the Egyptian Company for Automated Bill Processing Systems (Giro-Nil). Until now, if a service provider wanted to set up automated bill payments for its clients, it would need “to have a bank account in every single bank, because each bank has its own procedures, which is complicated.”
Giro-Nil – a public-private venture of Banque Misr, Egypt Post, Commercial International Bank (CIB) and Dutch bill processing specialists Inclusion Group – aims to introduce “one common backbone infrastructure for bill and salary/pension processing” to serve all banks and their commercial clients – and without involving any cash transactions. “We are trying to reduce the costly physical movement of cash for both salaries and bill payments,” says Spaans.
It’s a very basic model, he admits. Using the company’s proposed bill processing service for Telecom Egypt as an example, he explains how the state fixed-line operator’s bill processing could be improved. “Telecom Egypt can attach to their bill a simple paper-based document that contains all the information of the payment. The subscriber just signs it, puts it in a postage-paid envelope made out to Giro-Nil, and we process the transaction digitally,” he says.
Egypt Post’s 3,500 post offices serve as a nationwide network to receive and quickly deliver the signed payments to Giro-Nil. “Egypt Post is working as our mail delivery channel and through their offices you can also cash your salary and pay your bills,” Spaans explains.
Once received, Giro-Nil’s high-speed scanners are able to process hundreds of bills per hour. “Then they can deduct the money from one account, add it to the other account, no matter whether these accounts are in Banque Misr, CIB or Egypt Post offices.” By the end of the business day, Giro-Nil informs the respective banks of each account’s position and settlement is done through the Central Bank of Egypt.
Designated Giro accounts can be used for salaries, pensions and bills. “By having salaries and pensions transferred into bank accounts, and in the meantime having all bills deducted automatically from these accounts, we can give the best service and ensure the best use of money,” says Spaans. He explains that the system makes money transfer more efficient, cheaper and quicker, as it will be done within the same unified system.
One big hurdle to overcome, however, will be Egyptians’ general distrust of banking. Cash remains king, asserts Mohamed El Karaksi, operation manager at Suez Canal Bank. “I’m in the banking field and you cannot imagine how people still count on cash,” he says. “It will take some time until people trust a new system other than cash and use it to pay their bills.”
He also questions the timing of the service. Giro-Nil will employ a paper-based system that relies on snail mail delivery at a time when the country is shifting to paper-less and instantaneous Internet banking. “In order for this service to be done right, mail service must be perfect to ensure the delivery of the payment advice form,” he says. “What if I send my payment advice and it’s lost in the mail?”
Zein El Abdeen Abdel Fattah, a collector for the electricity utility, feels the new system could make his job easier, but wonders whether people will readily adopt it. “If this works with electricity bills it could be a great service as it would decrease the amount of cash I’d have to walk around with,” he says. “But I think it would be better suited to the upper class districts of Zamalek or Mohandiseen.”
Spaans concedes that people are reluctant to change, but says when the benefits of the service are clearly explained, they will be more receptive to the new system. Still, he admits it won’t happen overnight – though that hasn’t stopped him from making ambitious projections. “In 10 years time, we [hope] to include at least 20 million Egyptians, generating 2 billion non-cash transactions,” he says. “And once people see the functions and trust the system, it will grow even further and more banks can participate.”
To help things along, Giro-Nil is planning to launch a marketing and awareness campaign to introduce the new service to both individuals and firms. “In the beginning it will take some time, but this is very normal and similar to what we have encountered when we introduced credit cards to the Egyptian market,” says Hoda Shoukry, a member of Banque Misr’s executive committee and a board member of Giro-Nil.
Shoukry predicts that the biggest beneficiary of the new service will be service-providing companies because it will help their customers pay their bills on time. “And that will result in accelerating the collection of funds and get them actively involved in the economic cycle,” she says.
Hany Abdel Moneim, a branch manager of National Société Générale Bank (NSGB), sees Giro-Nil’s payroll processing applications as a huge advantage for all companies, as it reduces the risks, burden and costs by letting the bank handle salaries. But he points out that the employees themselves may find it more difficult to benefit from the automatic bill payment option. “From my experience in payroll processing... the majority of employees withdraw their whole salary on [payday],” he says. “Only a narrow segment of them, the top management, leave a remaining amount in their accounts.”
Shoukry says Banque Misr’s experience with Salary Card – a debit card that individuals can use to withdraw their salary from the bank’s ATMs – suggests that as customers grow to understand and trust the new service they will leave a balance in their account. “When the [Salary Card] service started, people did not leave any balance in their accounts, but after trusting the system they started to take out only what they needed and left the rest,” she says.
And that could help the economy along, argues Spaans. If clients leave a balance in their bank accounts, it will allow banks to put that money to better use. “When you take only what you need of your salary and leave the rest, banks can make calculations and use this money for other products, for example in giving mortgages or loans,” he says.
Last month, CIB created Giro payroll accounts for local staff of the Netherlands Embassy in Egypt as part of a pilot program to phase in the new billing system. Meanwhile, Pharaonic American Life Insurance Company (Alico) has signed an agreement to implement a Giro system for its insurance premium payments. So far, only partner banks CIB and Banque Misr are using Giro products, but Shoukry expects that more banks will join this service when they realize that this is where they should cooperate – not compete – with each other.
Abdel Moneim agrees. “This is the right track of banking services, and when it proves itself reliable it will attract more banks to participate,” he says.
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