Chapter Seven

The Central Bank of Egypt's Electronic Payment Initiative

In recognition of the importance of making all financial services available to all citizens in a fair manner and working to raise their usage rates of these services easily, securely, and at a reasonable cost, the Central Bank of Egypt is continuously strengthening the infrastructure of payment systems and providing various electronic means to banks to help them disseminate digital financial services and achieve higher rates of financial inclusion. In light of the challenges facing electronic acceptance in Egypt, including but not limited to:

• The need to increase the number of electronic point-of-sale (POS) terminals.

• The need to rely more heavily on the Quick Response (QR) code.

• The necessity of paying attention to the geographic distribution of electronic acceptance points.

• The need to put in place programs to increase the awareness of citizens, companies, and traders regarding the importance of electronic collection and motivate them to use it.

In line with the Central Bank of Egypt's vision to increase electronic acceptance points in all governorates, and in this regard and implementing the Republic of Egypt's strategy, the Central Bank of Egypt has decided to launch an Electronic Payment Initiative to increase the dissemination and activation of electronic acceptance channels, to be carried out according to the following:

First: Dissemination and Activation of Electronic Point-of-Sale Terminals (POS) through Acquiring Banks Licensed for Electronic Acceptance via Electronic Point-of-Sale Terminals: Dissemination of Electronic Point-of-Sale Terminals:

The Central Bank will fund the dissemination of 100,000 new electronic point-of-sale terminals, geographically distributed across all governorates, to be activated starting from the date of the instructions until the end of December 2020. The acquiring banks shall purchase and disseminate the electronic point-of-sale terminals, observing the following determinants:

o Observing the geographic distribution of new merchants in all governorates of the Republic (the geographic distribution is described in the guiding commitment document attached to the geographic distribution of electronic point-of-sale terminals in all governorates of the Republic) (Attachment 1).

o Giving priority to vital sectors or those with high densities of paper cash transactions (such as gas stations, supermarkets, pharmacies, etc.).

o Adhering to the minimum specifications for electronic point-of-sale terminals (POS) and mini electronic point-of-sale terminals (Mini POS) (Attachment 2).

o The necessity of placing the phrase "A Gift from the Central Bank of Egypt" on those machines.

o The use of those machines is restricted to new private sector companies and traders not registered with any other acquiring bank, and the bank is committed to ensuring that there are no other electronic point-of-sale machines belonging to other banks or payment service providers for all targeted merchants and companies for the dissemination of the aforementioned electronic point-of-sale terminals. The bank may obtain a declaration from the merchant as one of the means to verify this.

O The machines mentioned below shall not be used for:

• Any closed-loop system, as the machines must accept all cards issued by all networks licensed by the Central Bank to operate in the Arab Republic of Egypt.

• Any replacement or renewal operations for existing machines at the bank.

o The bank is committed to activating QR code acceptance on those machines.

o Dissemination Incentive: For the type of machine: ▪ The Central Bank will pay an incentive for each electronic point-of-sale terminal installed according to the machine type and its geographic location until November 30, 2020, as specified in the following table:

Electronic Point of Sale Type	Geographic Category	Incentive Amount
Mini POS	Category A (Installation in Cairo)	4,000 EGP
Mini POS	Category B (Installation in other governorates)	2,000 EGP
POS	Category A (Installation in Cairo)	3,000 EGP
POS	Category B (Installation in other governorates)	1,500 EGP

Determinants regarding the dissemination incentive for electronic point-of-sale terminals: ▪ The conditions and determinants were modified for all electronic point-of-sale terminals that banks will disseminate in governorates starting from December 2020, so that the dissemination incentive becomes 2,000 EGP for electronic point-of-sale terminals to be disseminated in Category A governorates only, up to a maximum of 100,000 electronic point-of-sale terminals, without adhering to the initiative's end date, with no incentive paid for disseminating electronic point-of-sale terminals in Category B governorates.

o Acquiring banks are committed to providing the Central Bank of Egypt with a weekly report containing the following: A detailed statement of the number of new merchants and the number and types of new machines geographically distributed across all governorates of the Republic.

• The total value and number of purchase transactions using electronic point-of-sale terminals for each terminal activated by the bank according to the determinants mentioned in the Central Bank of Egypt's Electronic Payment Initiative mentioned above.

• The detailed value payable as an incentive based on the initiative's determinants.

o The necessity of training the merchant on the use of electronic point-of-sale terminals, QR codes, and contactless operations, and placing distinctive signs at merchants indicating acceptance of this type of payment.

o Adhering to the Central Bank of Egypt's rules regarding payment technology service providers and electronic payment service providers issued by the Central Bank in March 2019, in case of relying on companies from payment service providers.

o The bank or payment service providers shall not charge companies or traders any additional amounts for providing the aforementioned electronic point-of-sale terminals.

o Payment service providers shall not load more than one electronic payment application on those machines, and the application must be approved by the acquiring bank.

o Developing marketing plans and plans to motivate merchants to use electronic collection channels, ensuring that collection is at an average monthly rate of 6,000 EGP per point of sale in Category A governorates and 12,000 EGP per point of sale in Category B governorates.

• The interchange fee for the national payment system in transactions conducted using national payment cards.

• The average interchange fee determined by companies holding international acceptance marks.

Activation of Electronic Point-of-Sale Terminals:

Regarding the machines mentioned in item (a) above, an activation incentive equivalent to 0.5% of the total value of purchase transactions conducted on those machines is allocated to acquiring banks until the end of June 2021 or until the amount allocated for this incentive by the Central Bank of Egypt is exhausted.

The aforementioned incentive will be paid to banks that have collected an average monthly amount of 6,000 EGP for each point of sale in Category A governorates and 12,000 EGP for each point of sale in Category B governorates, for all points of sale operated by the bank.

The Central Bank will pay the incentive for machines installed under item (a) and the activation incentive under item (b) based on a monthly report submitted by acquiring banks to the Central Bank of Egypt, containing the following: A detailed statement of the number of new merchants and the number and types of new machines geographically distributed across all governorates of the Republic according to the attached governorate classification.

• The total value and number of purchase transactions using electronic point-of-sale terminals for each terminal activated by the bank according to the determinants mentioned in item (a) of this letter.

• The detailed value payable as an incentive based on the determinants mentioned in item (a).

Second: Regarding Electronic Acceptance via Quick Response (QR) Code

Dissemination of Quick Response (QR) Code through Acquiring Banks Licensed for Electronic Acceptance via Quick Response Code:

The Central Bank will pay an incentive to acquiring banks for adding new merchants to this system according to the following:

o The incentive is restricted to disseminating the Quick Response (QR) code among new private sector companies and traders, and the merchant must not be on the QR code acceptance system or electronic point-of-sale terminals of the bank or any other acquiring bank, and the bank is committed to verifying this. The acquiring bank may obtain a declaration from the merchant as one of the means to verify this.

o The aforementioned Quick Response code shall not be used for collection for any closed-loop system.

o The acquiring bank is committed to training the merchant on using the Quick Response code in electronic collection operations and placing distinctive signs at merchants indicating acceptance of this type of payment.

o Adhering to the Central Bank of Egypt's rules regarding payment technology service providers and electronic payment service providers issued by the Central Bank in March 2019, in case of relying on companies from payment service providers.

o The acquiring bank or payment service providers shall not charge companies or traders any additional amounts for providing the aforementioned Quick Response code.

o Developing marketing plans and plans to motivate merchants to use the Quick Response code.

The addition incentive is estimated at 3,000 EGP for every 150 new Quick Response codes, starting from the date of the instructions until the end of December 2020.

Activation of QR Code Acceptance through Issuing Banks and Acquiring Banks for Mobile Wallets:

In light of the need to ensure the activation of the Quick Response code, an activation incentive equivalent to 0.5% of the total value of purchase transactions conducted using the Quick Response code is allocated until the end of June 2021 or until the amount allocated for this incentive by the Central Bank of Egypt is exhausted. The acquiring bank shall share this incentive equally with the issuing bank of the payment instrument.

The Central Bank of Egypt will pay the two incentives mentioned in item (a) and item (b) to acquiring banks at the end of each incentive period, based on a report from the acquiring bank containing the following: A detailed statement of the number of new merchants and Quick Response codes geographically distributed across all governorates of the Republic.

• The total value and number of transactions conducted using the Quick Response code, indicating those conducted via payment instruments issued by the bank (on-us) and payment instruments issued by other banks (off-us), with the number and value of transactions conducted using payment instruments issued by each bank specified separately.

• The detailed value of the incentive payable based on the determinants mentioned above.

Banks licensed for electronic acceptance (Acquiring Banks) shall launch a unified advertising campaign to raise awareness of the benefits of electronic payment using the electronic point-of-sale terminals mentioned in item one and the Quick Response code mentioned in item two, as well as current exemptions regarding electronic collection service fees, to motivate customers using payment instruments and traders to pay and collect electronically. The Egyptian Banks Union shall coordinate with the aforementioned banks to design, implement, and launch the campaign.

Third: Motivating Customers for Electronic Payment through Issuing Banks of Electronic Payment Instruments (Payment Cards - Mobile Wallets):

All issuing banks of electronic payment instruments (payment cards or mobile wallets) are committed to preparing incentive programs for their customers to increase the issuance and use of electronic payment instruments issued through them in electronic payment operations. Issuing banks of electronic payment instruments are committed to providing the Central Bank of Egypt with details and determinants of those programs, as well as providing the Central Bank of Egypt with monthly reports containing the following:

• A statement for each electronic payment instrument issued by the bank and the number and value of its specific electronic payment transactions.

• A statement of the number and types of new electronic payment instruments issued by the bank.

Attachment No. (1) Guideline Geographic Distribution of Electronic Point-of-Sale Terminals

Number of Electronic Point of Sale Terminals	Governorate	Incentive Amount
6,018	Cairo (Category A)	4,000 EGP
7,579	Alexandria (Category B)	2,000 EGP
4,081	Port Said
7,398	Damietta
7,209	Dakahlia
8,070	Sharqia
6,753	Qalyubia
5,888	Gharbia
5,114	Monufia
3,930	Beheira
5,795	Fayoum
6,542	Beni Suef
4,008	Minya
1,637	Asyut (Category A)	4,000 EGP
5,246	Sohag
3,808	Qena
3,791	Luxor
1,377	Aswan
1,686	Red Sea
1,344	New Valley
758	North Sinai
298	South Sinai
551	Ismailia
750	Suez
	Outside Governorates
	Total Initiative Governorates

ITEM	Description	POS detailed Specs.
Memory	128 MB RAM, 256 MB Flash.
Printer	30 lps, 40 mm paper roll
Card reader	Magstripe ISO 1/2/3, 500K lifespan. Smart card EMV Level 1. Contactless ISO 14443 Types A and B, ISO 18092- capable, EMVCo L1 certification, supports local / international schemes according to issued rules and each bank standard setup.
QR Code	Perform QR transactions as per Meeza digital specifications
Communication	Wireless, 3G Dual SIM model, Dial up and Ethernet
Card slots	2 SAM slots, 2 SIM slots
Security	PCI PTS 5.X-approved
Battery	2200 mAh Li-Ion
Terminal Management System	Display Geo locations (longitude / latitude) of each POS terminal. Dispatch updates for the POS terminals. Display status of each POS terminal. Supports integration with 3rd party APIs to extract details such as terminal location, POS status ,… etc.

ITEM	Description	Mini POS detailed Specs.
Card reader	Magstripe ISO 1/2/3, 500K lifespan. Smart card EMV Level 1. Contactless ISO 14443 Types A and B, ISO 18092- capable, EMVCo L1 certification, supports local / international schemes according to issued rules and each bank standard setup.
QR Code	Perform QR transactions as per Meeza digital specifications
Communication	Wireless, Bluetooth, 3G
Card slots	1 SIM slot
Security	PCI PTS 5.X-approved
Battery	2200 mAh Li-Ion
Terminal Management System	Display Geo locations (longitude / latitude) of each POS terminal. Dispatch updates for the POS terminals. Display status of each POS terminal. Supports integration with 3rd party APIs to extract details such as terminal location, POS status ,… etc.