Mohammed Al Alami, corporate business development lead at tap payments. In this article, he will discuss how to scale your business through payments focusing on the fragmented payment landscape in the MENA region.
Whenever a business wants to launch, they start small, locally. Once they grow and create a healthy environment in a local market, they decide to scale regionally and then focus globally. Markets like Jordan, Lebanon, and Egypt are the most interactive and opportunistic markets in the middle region.
Before the pandemic, everybody preferred to pay cash in the MENA region. It was difficult for anyone to pay online due to the lack of trust and the dominance of in-store purchases. Returns and refunds could also be a nightmare. As COVID hit, all businesses were forced to go online. If you were not online, you did not survive. So, the first thing everybody started doing was going online. With the surge of online businesses, businesses supporting these online businesses thrived. Shopify and WooCommerce were old platforms that saw a surge in the number of users. New companies like Zid, Zyda, and Zoho also thrived. Website builders, CRMs, inventory management systems, and account management software solutions also grew. Last-mile delivery solutions to ensure that all products get delivered not just on time but at the highest frequency in the fastest way possible and to ensure that no products get lost or stolen are important. Online payments have become more secure. There was a lot of focus on improving the payment experience, payment infrastructure, regulations, and security, especially with the government’s support.
Governments in the UAE and Saudi started with the thought of a cashless economy. This was replicated in other countries in the GCC and the MENA region. Governments talked about regulations and rules in an ecosystem for all businesses to operate healthily and securely. Because of that, consumer security and protection were at an all-time high.
If you want to look at the ecosystem in the MENA region, internet penetration has never been higher.
Purchasing power is the decision that an average consumer living in the GCC takes to make a payment or buy something, whether online or physically, in any store. After government campaigns, purchasing power in the GCC increased. COVID came in in 2020, but a huge boom happened even after that. You can see additional growth in 2021 of 35% in the MENA region within the ecommerce landscape. “Cash was king” is now phasing out. Only 10% of the people in the MENA region still prefer to pay with cash. The rest go for digital payments, with around 58% preferring to pay online using a card or alternative payment methods such as Apple Pay. Buy now, pay later is also on the rise.
Fragmented MENA Landscape
You don’t want to miss out on a customer because of a lack of payment acceptance. VISA, MasterCard, and American Express are known to everyone as they are international networks. The GCC has around 60 million people, and the market is fragmented.
MADA is a local debit card network in Saudi Arabia. In Kuwait, there is a network called KNET. In Bahrain, there’s a network called BENEFIT.
In Qatar, you have NAPS, OmanNET in Oman, and Misa in Egypt.
In addition to this, there are alternative payment methods as well. In addition to international options like ApplePay, GooglePay, and Samsung, GCC has local payment methods like STCPAY, FAWRY, BENEFITPAY, etc.
Local Debit Networks
Saudi Arabia – MADA – There are 43.5 Million Card users. Of these, 39 Million use MADA, and around 4.5 Million are credit cards issued by Visa or MasterCard. So, in Saudi Arabia, if you do not support MADA, you will miss out on many customers. In Saudi Arabia, 95% of all transactions made by cards were from MADA.
In Kuwait, KNET, there are 4.1 Million cards in a total of 4.9 Million cards. Checkout experience also varies for local cards.
FAWRY is an alternative payment method in Egypt. It is not a debit network. It is a cash reference system. In Egypt, most people over the age of 15 have a bank account, but many do not have cards. So, when they want to buy online, they choose FAWRY as an option during checkout. They are then given an order code and store locations, where they pay in cash, and the online transaction for their item goes through.
Enabling a seamless payment experience for your customers
- Provide multiple payment options
- Ensure that they can pay with any currency.
- Streamline the refund process to ensure it’s easy for them to get their funds refunded.
- To avoid refunds and chargebacks, use “authorized.” When any purchase happens, instead of charging the card, you can authorize the amount. It places a hold on the transaction amount in their account, but the amount hasn’t left their account. So, if there is any issue, you can void the transaction. The need for a refund or chargeback is negated.
- Fraud Management – Ensure your customers are protected.
Streamlining operations for you and your partners
We hear a lot about growing marketplaces: you onboard suppliers and business partners. You do their KYC. You then set up payment acceptance, splitting payments for revenue share, reconciliations, and payout.