A New Law Regulating Cashless Payme

Following discussions extending over a year under the auspices of the National Payments Council that is chaired by Egypt’s President, Law No. 18 of 2019 (the “Law”) was finally issued to regulate the usage of cashless payments.[1] Overall, the Law prohibits cash-based payment methods in certain cases while encouraging the usage of cashless methods in other cases. The Law specifies a compliance period of six months from the date its Executive Regulations (the “ER”) go into effect. However, given that the ER have not yet been issued, the Law will most likely not become binding until a year from now.

Scope of the Law

Among the most important provisions of the Law is its identification of the concerned entities falling within its purview, which must cease dealing in cash-based transactions by the end of the compliance period. However, it should be noted that the concerned entities are not required to stop all cash-based dealings in an absolute fashion; instead, they are prohibited from such dealings for certain payments only and if the payment amount (to be made or received) exceeds the limits that are to be set by the ER.

Concerned Entities

1. All government authorities and agencies;
2. Public legal persons/corporations;
3. Companies with the government as the sole or majority shareholder;
4. Private legal persons/corporations; and
5. All entities whatever their legal form.

Put differently, all agencies and legal persons, whether public or private – including ministries, authorities, governorates, public and private companies, syndicates, NGOs, parties, and universities – and every entity with an established legal form. In other words, all persons except for individuals.

Transactions Falling within the Purview of the Law

1. Salaries, all financial entitlements, social security, and compensation;
2. Payments to suppliers, contractors, and service providers;
3. Fees associated with buying, renting, and exploiting lands, real estate, and vehicles;
4. Financing;
5. Dividends; and
6. Donations made by

However, all of these are to be paid through cashless methods only if the payment amount exceeds the limits to be set by the ER, with the exception of salaries (and their related financial entitlements) which have no threshold. The Law also allows the Prime Minister, based on the Minister of Finance’s recommendation and upon the approval of the Central Bank of Egypt’s (“CBE”) Governor, to add to the list of payments that are not to be made by cash.

Transactions that Could be Settled through Cashless Methods

As mentioned above, the Law prohibits cash payments in some of the above transactions while encouraging (rather than mandating) cashless payments for other transactions. It therefore requires entities that provide public services or manage public facilities to allow people to make cashless payments at no additional cost. However, public service providers may charge additional fees if the provision of the service is accompanied with its delivery to the recipients.

Transactions that are Prohibited in Cash

The Law also specifies the transactions which the public, whether individuals or legal persons, is prohibited from settling in cash when their values exceed the limits to be stipulated in the ER. They are as follows:

1. Taxes;
2. Customs;
3. All types of fees and fines payable to the state;
4. Banking and non-banking financing instalments;
5. Insurance premiums;
6. Syndicates membership fees and private insurance funds fees;
7. Receiving donations for NGOs; and
8. Collecting the fees associated with the sale, exploitation and use of land, real estate, and vehicles.

Similarly, in this category, the Law stipulates that the Prime Minister may, upon the recommendation of the Minister of Finance and the approval of the CBE’s Governor, add additional payments that are prohibited in cash.

Fines

Finally, the Law specifies a fine of not less than 2% of the amount paid in cash and not exceeding 10% of its value, with a maximum of EGP 1 million, on anyone who violates the prohibition of cash payments or the collection of payments in cash as set forth above. It also imposes a fine between EGP 100,000 and 300,000 on those who prevent the public from paying for public services using methods of payments other than cash.   [1] Law No. 18/2019 regulating the usage of cashless methods of payments, Official Gazette, Issue No. 15 (bis.) (b), 16 April 2019.