EGYPT Law and Practice Contributed by: Dina Kamel, Helal El Hossary, Omar Fouda and Kareem Hashem, Zaki Hashem
requiring FRA approval and specific readiness meas - ures before licensed intermediaries can conduct their activities digitally. Looking to the next 12 months, the significant factors/ areas to look out for will be: • implementation and enforcement of the CBE’s licensing regime for PSPs and PSOs, which will shape consolidation, outsourcing and compliance; • continued FRA digitisation of non-banking activi - ties, including digital investment platform frame - works and “licence-first” expansion into new verticals; • consumer protection and fraud pressure as instant payments volumes, product complexity and fee structures expand; and • data protection compliance and cross-border cloud risk, with the release of the Data Protection Law Executive Regulations and establishment of a personal data protection centre (PDPC). AI models are already being used in Egyptian fintech products, and this use is expected to greatly acceler - ate, especially in relation to fraud detection, AML and transaction monitoring, credit decisioning, collections optimisation and customer support automation. The legal risk is less about prohibition and more about whether AI changes the nature of the regulated activity – and whether firms can evidence governance. Data origination and consent, explainability and bias con - trols for automated decisions, audit trails and robust third-party model management are to be scrutinised, especially where cloud or external model vendors are involved. Software “black-box” auditing, in case of machine learning AI tools, will continue to be a major issue for regulators.
tion and rails, while newer entrants aim to innovate via efficient product design, faster onboarding, vertical focus and partnerships.
CBE (Banking and Payments) The following are of relevance:
• payment facilitators and aggregators (PSPs) on- board merchants, provide acceptance tools (quick response (QR), point of sale (POS), gateways), route transactions to banks and offer settlement as a service; • internet payments and payment gateways facilitate e-commerce payments (cards, wallets, bank trans - fers) via checkout application programming inter - faces (APIs), fraud tools and merchant analytics; • governmental payments (non-cash) – digital collec - tion of government fees and dues (taxes, utilities, fines, licensing fees) through banks, wallets and aggregators, focusing on scale and reliability; and • digital-first banking propositions (often via licensed banks) emphasising remote onboarding, digital channels and embedded services/products such as wallets, cards, lending and savings. FRA (NBFS) Of note here are the following: • consumer finance (including buy now, pay later – BNPL) – instalment-based purchasing and con - sumer credit, embedded at the POS or in apps, supported by underwriting and collections; • SME finance – credit granted to juridical persons operating SMEs for the purpose of supporting their productive, service, commercial or agricultural eco - nomic activities to finance working capital, assets or business expansion and growth; • microfinance – small-ticket credit to micro-enter - prises (projects with annual turnover below EGP1 million or start-ups with capital under EGP50,000) for productive, commercial or agricultural activities requiring borrower participation through labour or capital. • nano finance – ultra-small, high-frequency credit products (often with short tenors) offered to juridi - cal persons, commonly delivered through mobile journeys;
2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models
In Egypt, fintech business models tend towards two regulatory groups: CBE-supervised banking and pay - ments, and FRA-supervised non-banking financial services (NBFS). Legacy players (banks, telcos, large payment aggregators/operators) dominate distribu -
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