Why digital remittances are needed to boost Egypt’s economy

By Puja Sharma

Remittances are a crucial source of income and foreign currency in Egypt, often serving as the only financial safety net for low-income households. They provide a much-needed influx of cash to cover necessities such as food, housing, and healthcare.

Remittances, which represent billions of dollars, play a pivotal role in supporting the national economy at both the macroeconomic and microeconomic levels. They not only enable families to cover their basic needs such as healthcare and education, but also facilitate access to the real estate market and various investment opportunities. Moreover, remittances contribute to the balance of payments and help to boost foreign exchange reserves.

In tandem, transparency is an essential component of successful cross-border payments. The frictional pain point associated with payments, including exorbitant fees and disagreeable user experience, is now further exacerbated by the lack of openness in this sector.

Poor visibility into the costs and complexities of the payment process leads to a lack of understanding of the associated fees, resulting in higher costs and a less-than-satisfactory user experience. As such, banks today must strive to increase transparency to improve the overall state of cross-border payments.

This year’s International Day of Family Remittances marks a noteworthy milestone in recognizing the significant contributions of remittance families in Egypt and the world over. As a part of this observance, acknowledging to strengthen digital channels that speed up the value of remittances increases long-term financial resilience becomes imperative now more than ever.

How Egyptians Contribute to Their Home Country Through Remittances

The fact that Egypt has risen to the fifth-highest receiver status in the world for remittances comes as no surprise today. A considerable Egyptian diaspora exists as a result of the country’s wealth of talent and its history of shifting economic fortunes and political turmoil.

The majority of the remittances sent by this diaspora—half of which lives in close-by Gulf Cooperation Council nations such as Saudi Arabia—go back to Egypt. Due to this, the nation has been able to surpass both Nigeria and other higher-earning nations such as India, Mexico, China, and the Philippines. There is little doubt that the contributions from the diaspora have had a noticeable effect on the nation’s economy.

Moreover, Egypt has worked to develop relationships with its expatriates that are more robust and long-lasting in recent years. According to the Central Bank of Egypt (CBE), remittances from Egyptians working abroad saw a significant upturn from $29.6 billion in 2020 to $31.5 billion in 2021. The Egyptian economy as a whole, as well as the quality of life for its people, are anticipated to benefit from this inflow of foreign currency owing to the soaring rate of the nation’s foreign reserves, which are used to pay for imports. The remittance flow is expected to rise even further soon as Egypt keeps growing its foreign labor force.

While Egypt receives a sizable portion of its revenue from remittances, sending money home remains far from smooth despite a few digital payment options. There may have been a considerable increase in both investment and innovation in the payments space in Egypt, but this industry is still in its infancy, hence traditional money transfer companies control practically all cross-border payment flows outside of trade. With this comes a transferslong process and tactics, such as charging extra fees that complicates the money movement process.

Benefits of Faster Money Movement with Visa’s Innovative Solutions

A recent study published by Visa titled “Money Travels: 2023 Digital Remittances Adoption” concludes that consumers perceive the future as digital with 53% of them turning to digital apps for money transferring. Besides, more than 70% of consumers want a speedier payment solution that enables rapid transfers and alerts. As a result, we could highlight our service’s speed and efficiency, making it more appealing to prospects.

Cyber security is another pressing issue in the current digital world. According to our research, customers have a strong appreciation for the Visa brand about real-time payments (RTP) solutions, with 80% indicating that the brand adds credibility and confidence to their experience. With the prevalence of security threats, Visa’s assurance of safety and trust in its RTP offerings is an invaluable benefit. We believe customers will continue to appreciate the Visa brand for its renowned security measures and trustworthiness in RTP services.

Despite the emergence of recent developments in the economy and a shift in consumer behavior, Visa strives to make digital remittances an appealing alternative for individuals and businesses alike. We recognize the convenience, cost-efficiency, and security that digital remittances provide and are working to make them a viable option for people around the world.

The combination of these factors, coupled with our commitment to providing customers with the best service, make digital remittances an attractive choice for those looking for a reliable way to move money. This way, we believe migrants and their families can utilize faster transfer solutions in the remittance market and we are proud to be at the forefront of such an endeavor.