Several Egyptian banks doubled the fees for using payment and credit cards abroad from 3% to 6%. In contrast, other banks resorted to restricting the ceiling of cash withdrawal abroad with specific values due to the continued crisis of the hard currency shortage that Egypt has suffered since the beginning of this year.
An official at Banque Misr, one of the largest government banks, revealed that the new restrictions came based on the recommendation of the central bank, which modified the limits of withdrawal and commissions changed boundaries of withdrawal and commissions and the limit available for the traveller customer, which he obtained after presenting the travel card was reduced to 1,000 dollars from 2000 dollars previously.
The Commercial International Bank (CIB), the largest private bank in Egypt, sent text messages to its customers. He explained that “the maximum purchase of foreign currencies will be modified using direct debit cards or credit cards.” So, for example, the monthly limit for cash withdrawal outside Egypt for the “Plus Titanium Card” will become 10 thousand pounds, and the monthly use of purchases outside the country is 50 thousand pounds or its equivalent in hard currency. The first Abu Dhabi Bank, Egypt, resorted to a maximum of the dollar withdrawals from the ATMs outside Egypt at $ 500 or its equivalent foreign currencies per month for the credit card “Titanium”. At the same time, the HSBC Bank, Egypt, reduced the maximum use of its cards to $ 5,000 per month.
Allen Sandeep, head of research at Naim Financial Investment Company, said that the reason behind raising fees and setting up withdrawal restrictions is “The gap in the exchange rate between the official market and the parallel market, in addition to trying to reduce customer spending abroad.” The Egyptian pound decreased to its lowest level against the dollar, as it recorded 19.69 pounds against the dollar, according to the data of the Central Bank of Egypt, which represents a decrease of 25% since last March. At the same time, the dollar price on the black market reached 22.5 pounds, according to several customers in the currency.
Amr Al -Alfi, head of research at Prime Financial Company, explained that raising the commissions and setting a maximum use of cards outside Egypt is due to the “misuse of cards outside Egypt, as some customers resort to them instead of buying a dollar from the bank in the event of a maximum amount for the amount that can obtain can obtain. This unfair use may eventually lead to unjustified pressure on the country’s foreign assets. ”
The restrictions on withdrawing abroad came after imposing internal limits to maintain the dollar. The central bank decided last February to stop work with collection documents upon import and approved the bank documentary credits system. The documentary credits obligated the importers to pay the value of the entire shipment when contracting, in contrast to what they are accustomed to paying only part in the beginning, then completing the payment after selling the goods. Last July, the banks operating in Egypt raised the value of their commissions necessary to open bank documentary credits by more than 1,000% in an attempt to restrict importers’ and traders’ demand on the dollar to reduce the intensity of the crisis of foreign exchange shortage in the country, which then sparked criticism and anger of the business community.
The average commission of opening documentary credits imposed by banks increased from about $ 100 for each documentary credit worth $ 100,000 to $ 1250. Some banks determine the value of the commission through a system similar to the “auction”. If a company wants to end its papers early and obtain a documentary accreditation required for import, it must pay more than others to end its dealings. The branches of foreign companies operating in Egypt also received a share of the crisis, as banks raised the currency conversion commission with a massive value of 37400% after the fees rose from about 4 thousand to 1.5%.