As the world reacts to health experts’ advice meant to avoid spreading the novel coronavirus, the need to pay for goods and services without making contact with others is driving a global shift to digital payments.
Governments have been responding to the need for distance by calling for increased reliance on digital payment and banking services. The Central Bank of Egypt (CBE) recently released guidance to that country’s banks intended to reduce the cost of electronic payments usage to consumers and merchants while allowing for increased volumes.
First, the CBE is increasing daily and monthly limits for transactions made via mobile phone and through contactless means. For contactless prepaid cards, for example, the bank is doubling the limit for transactions that can be completed without entering a PIN.
The central bank is also streamlining procedures banks should use to verify the identities of both new and existing customers. It is allowing banks to open new accounts for existing customers using already completed KYC information. And for new customers, it’s setting lower monthly transaction limits and requiring them to complete any due diligence procedures within three months of opening an account.
The CBE has also directed banks to activate QR code and “Request to Pay” services – the ability for a merchant to send a payment request to a customer’s digital wallet – for all merchants using POS terminals and to inform their customers about the availability of these services.
Finally, the central bank is mandating removal of any charges for the use of digital wallets, and it is exempting all merchants from paying any fees for POS and QR code transactions for six months, expecting the banks to absorb these costs.
Egypt’s new rules come at a time when digital payments usage for some types of transactions is surging in response to the virus in locations around the world.
The Wall Street Journal cited a McKinsey & Co. estimate that Italy, which has been hit hard by the virus, has seen an 81% increase in ecommerce transactions since February. Online payment platforms in South Africa are also reporting increased volumes.
In response to the need and the demand, other governments have looked to similar strategies to the CBE response – raising limits and reducing costs for consumers and merchants. For example, UK Finance, which represents banking and finance companies in the UK, recently announced an increase in spending limits for contactless card payments. The Bank of Jamaica also said it plans to waive transaction fees associated with digital payments through the end of the month.