Whether it’s buying a bus fare or an airline ticket, Egypt’s first and biggest e-payment firm Fawry handles around 1.5 million transactions daily.
Fawry CEO Ashraf Sabry told Venture how he planned to convince even more merchants and consumers to make the switch from cash to e-payments.
How big are mobile payments in Egypt?
In terms of number of subscribers I believe that we have around 5 million subscribers. In terms of the active number of subscribers we are probably at 6 percent. It took two years to reach this number. But still, the number of transactions are not that big.
You also insist that cash is not a bad thing, so how do you manage to change a culture that prefers cash?
You solve people’s problems. If you have a customer who’s paying cash and you want them to pay electronically, you can give them loyalty and incentives. You can actually leverage the value of a device like the mobile where you can bring a whole new experience that will make [payments] much more convenient, then you are creating value in the process, and then payment follows. But just the idea of paying electronically does not make sense to anybody.
Who are your customers?
In Egypt, we have two customer segments; first is the bank population where we offer our services through banking channels, including services that allow people to pay their bills, their bus and airline tickets. Then we do the same exactly for the unbanked or the under-banked where you go to an agent and there you make the payment either in cash or electronically. These are the two main customer segments and probably they are mainly in the age group between 20 to 40.
How do you convince merchants to shift from cash to electronic payments?
I’m positive that electronic payment alone does not have a huge value. You have to look at the structure of the market; if you go into Europe you will find that because the majority of the retail is organized, the percentage of mom-and-pop shop retailers is small. If you go to a mom-and-pop shop they will most probably ask you to pay in cash rather than using a card. But in organized retail where they handle a lot of cash it is a problem to them so they ask people to pay electronically. I think it is about getting value.
In 2015, a consortium of international financial investors, comprising the Egyptian-American Enterprise Fund (EAEF), Helios Investment Partners and the MENA Long-Term Value Fund (MENA LTV) bought a $100 million stake in Fawry. How important was this?
It was a recognition of the efforts that we exerted. From day one we were institutional, meaning that from the beginning we had among our shareholders the IFC, three banks including HSBC, and two local banks. So we were never a small local startup, we started with a decent capital. So it was a very good exit for the existing shareholders. They made good money and in the meantime it was a recognition by investors of Fawry as a good investment opportunity. It also gives us more access to cash.
What about Fawry’s plans for the future?
We are still looking for expansion in the Egyptian market, not yet outside. But if we go outside the country it will be driven by our technology platform because all the technology is homegrown by talented Egyptians. So we think now we have a technology that has been productized to the extent that we can take it outside the country. We are trying to leverage our technology. We have a very robust platform that is processing almost 1.5 million transactions on a daily basis. We are being used by around 18 million Egyptians. We think that it will be better to work with local partners leveraging the technology and maybe leveraging the organization too like management, market models and the experience we have gained over the years.