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Insights Middle East & Africa Paytech

Data Has to Be at the Heart of Payment’s Strategy to See Continuous Success Finds Checkout.com

The MENA region is rapidly evolving its digital economy. As a result, a large opportunity still remains for merchants to improve their bottom line through digital payments, according to a report released by paytech Checkout.com.

The Seizing the Digital Opportunity in MENA 2023 report is a part of Checkout.com’s annual MENA Report series. It acknowledges how the region’s digital economy has moved from strength to strength in recent years. However, Checkout.com suggests that merchants’ ability to fine-tune their payment performance using data is a decisive factor in retaining their competitive edge.

With that in mind, the report offers a guide to help merchants better capture the opportunities of digital transformation. This includes exploring how to take payments to the next level through AFTs, putting data at the heart of payments strategies, keeping fraud at bay, and partner models for expanding digital commerce platforms. The report features notable contributions from executives at companies. These include Visa, Al-Futtaim Group, Azadea Group, and others.

Remo Giovanni Abbondandolo, general manager for MENA at Checkout.com, said: “Nearly four in five consumers in MENA are already engaging in various types of fintech activities. These include money transfers such as Western Union, and wealth management and investments such as Sarwa, Baraka and Get Stake.

“In the current pace at which the digital economy is growing, optimising payment performance is not just a necessity. It is a strategic asset that can unlock new revenue streams and eliminate inefficiencies. Refinement of payment tactics and leveraging data-centric approaches can provide a much-needed edge over the competition.

“At Checkout.com, we are committed to supporting merchants in their journey towards revenue optimisation. This is in addition to capturing the best opportunities that the digital economy in MENA presents. Following the granting of our direct acquiring license in the UAE from the Central Bank, we now have more control over processing outcomes. We can drive best-in-class payment acceptance and performance for our merchants,” Abbondandolo added.

Putting data at the heart of your payment’s strategy

The rise of digital payments in the MENA region has resulted in the need for businesses to collect and analyse digital payment data. This data has the potential to drive revenue benefits for businesses, from optimising the checkout process to evaluating internal processes and operations. Despite 49 per cent of survey participants reporting access to payment data, a significant number of merchants in KSA and UAE cannot turn it into actionable insights.

The report shows that 75 per cent of merchants in the UAE and KSA measure payments optimisation KPIs, including authorisation rates, chargebacks, downtime, and fees, as part of their overall financial performance. By understanding their payments data, merchants can also unlock significant cost savings by identifying costs. These can include scheme fees, interchange, markup, or real-time FX fees.

Having access to, and regularly monitoring payment data, is critical to analyse the conversion funnel. Not only that, but it’s crucial to make the necessary adjustments to improve performance, observed Paul Carey, executive vice president of cards and payments, Al-Futtaim Group.

“Payment data is central to our decision-making, particularly when it comes to payment solutions, payment methods and inventory selection. The depth of insights is really valuable. You can learn where your customers are based and what payment methods they prefer. And we can track these trends across our portfolio of brands to ensure optimal performance on all fronts. For example, some studies suggest that checkout abandonment rates for MENA may be as high as 70 per cent,” he added.

Keeping fraud at bay

Using payment data to monitor the health of a risk strategy and identify areas of weakness is necessary for optimised execution. According to Checkout.com’s findings, 65 per cent of consumers in MENA may avoid shopping online if they have safety concerns. A further 75 per cent of them will not reattempt to purchase an item from the same website, or at all, if their payment is falsely declined. Moreover, a quarter of consumers in MENA have had a payment declined online in the past year despite having enough funds in their accounts.

Visa, a global payment technology company, has emphasised the importance of implementing an end-to-end fraud strategy for businesses. Not only to protect their revenue, but to unlock previously lost revenue streams due to fraud.

Dr. Saeeda Jaffar, senior vice president and group country manager for GCC, Visa, said: “As the world recovers from the pandemic, the payments industry can expect fraudsters to return their focus to financial institutions and merchants, with cybersecurity attacks carried out in the new, increasingly digital age. With the right approach and fitting technologies, industry players can stop threat actors from damaging the ecosystem, maintain trust in digital payments and provide a top-notch end-to-end payment experience for consumers.”

Choosing a partner, not a provider

The payments industry is an essential part of the rapidly growing digital economy in the MENA region, with many businesses now offering embedded finance. Accordingly, merchants in the region should partner with an expert payments optimisation company to fast-track their path to success. Data from Checkout.com’s report shows that 41 per cent of merchants in UAE and KSA look for a payment provider with the most modern technology and expertise to support the most advanced payments setups.

Nezar Alhaidar, director at Fintech Saudi, also highlighted how fintechs can empower merchants in Saudi Arabia through technology and new business models that help reduce costs, increase speed, and remove friction. He said: “Fintechs can help merchants get online, improve operations, and scale through partnering with a provider who has expertise in navigating through the complexities of online payments.”

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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