New Egyptian banks suspend the use of direct debit cards in pounds abroad

The Central Bank of Egypt issued instructions to banks operating inside Egypt to “limit the use of direct debit cards” issued for accounts established in the local currency to use inside Egypt only.

The decision comes to fight the parallel market and reduce the state’s expenses with green paper, which it has difficulty providing.

Two sources, one from HSBC Bank and another from Qatar National Bank working in Egypt, confirmed in two communications with “CNN Al-Eqtisadiah” that direct debit cards have been suspended since today, without specifying the hour for stopping transactions from abroad. They added that this measure was implemented according to instructions from the Central Bank of Egypt. And that “the withdrawal ban does not apply to credit cards or to cards issued for dollar accounts.”

The decision comes to combat the parallel market that has spread in Egypt since August of last year, and the US dollar is being sold for 40.25 pounds per dollar on Monday morning, according to one of the dealers in the parallel market in the 6th of October suburb.

Egypt is suffering from a severe crisis in the US dollar, which led to taking sharp decisions such as applying documentary credits for imports, gradually reducing withdrawal ceilings for individuals outside the country, in addition to applying a management commission estimated at ten percent of the value of the required foreign currency, whether for importers or individuals, which led to the growth of the market. Parallel to foreign currencies, especially the US dollar, and a great scarcity of green papers.

The Central Bank of Egypt had announced at the end of last May the suspension of prepaid cards outside Egypt. Most of the holders of these cards do not have bank accounts, and the number of these cards in Egypt is estimated at about 25 million.

Banks suspended the use of Egyptian pound debit cards

Commercial International Bank Egypt (CIB), Credit Agricole, Al-Arabi Bank, Al-Ahly United Bank, the Housing and Development Bank, Banque Misr, QNB Bank, the Arab Investment Bank, and the Arab International Bank were notified.

Sunday, the Commercial International Bank announced the cessation of transactions in foreign currencies for direct debit cards issued in pounds to companies, as of October 10.

The bank said in a text message to its customers that the use of the direct debit card is limited to transactions in pounds inside Egypt only.

At the end of last week, two banks suspended the use of Egyptian pound debit cards abroad to stop the drain of foreign currencies as the currency shortage worsened in the country.

A number of customers said that the Arab African International Bank and the Arab International Bank sent a notice to customers last Thursday announcing the suspension of this service.

Black market

A large number of debit card holders were using the cards to make bulk purchases, often in the UAE, of gold, mobile phones and other products to take advantage of the low official exchange rate of the Egyptian pound.

Debit card transactions are charged at the official rate of about 31 pounds to the dollar, while the dollar is sold on the black market for about 40 or 41 pounds.

Egypt has kept its currency stable against the dollar since March, despite the widening gap between the official rate and the black market.

According to some bank customers, customers wishing to travel have no choice but to open accounts in foreign currency or use credit cards that add fees and interest.