payments
Middle East & Africa Paytech Thought Leadership

Paymob: Real-Time Revolution – How MENA is Leading the Rise of Instant Payments

The transaction volume of payments in the Middle-East and Africa region is set to almost quadruple by 2027 ($2.6billion) from its value in 2022 ($675million). This increase is being largely spearheaded by Egypt, Saudi Arabia and the UAE, but how?

Mostafa Menessy, co-founder and CTO of MENA-based fintech company, Paymob breaks down the different technological advancements and initatives that are enabling the MENA region to take such a front running position in fintech and payments development.

Real-time revolution: How MENA is leading the rise of instant payments
Mostafa Menessy, co-founder and CTO of fintech solution provider Paymob
Mostafa Menessy, co-founder and CTO of fintech solution provider Paymob

The MENA region is emerging as a global leader in instant payments, driven by rapid technological adoption, strategic government initiatives, and a robust increase in digital payment transactions.

MENA is the fastest growing real-time payments market globally according to ACI Worldwide, with transactions in the region expected to surge from $675million in 2022 to $2.6billion by 2027, representing a compound annual growth rate (CAGR) of 30.6 per cent. Countries like Saudi Arabia, the United Arab Emirates and Egypt are at the forefront, significantly transforming how financial transactions are conducted and setting a benchmark for global markets.

Government initiatives and strategic adoption

Governmental strategies and regulatory frameworks in MENA countries are crucial in promoting the adoption of instant payments. These initiatives aim to reduce the reliance on cash, enhance transactional efficiency, boost growth, and integrate more of the population into the formal economy.

In Saudi Arabia, the implementation of the Sarie system by the Saudi Central Bank in collaboration with Mastercard and IBM in 2021, is a trailblazing leap toward modernising the payment infrastructure. This move aligns with Vision 2030, aiming to diversify the economy and reduce cash dependence, boosting efficiency and inclusion.

Sarie facilitates instant fund transfers within the Kingdom, enhancing both consumer convenience and business liquidity. The system also enables the use of a mobile number as an identifier instead of the IBAN for transactions between banks, and the ability to verify the validity of the recipient’s bank account before completing the transaction

UAE

The UAE has also made substantial strides with the launch of its instant payment platform, Aani in 2023, designed to transfer and settle funds within ten seconds, 24/7. This initiative further solidifies the UAE’s position as a fintech hub and catalyzes economic growth and financial inclusion.

Egypt

Egypt is not far behind, with the Central Bank of Egypt rolling out its Instant Payment Network which significantly reduces reliance on cash and integrates a larger segment of the population into the formal economy. This initiative is a crucial part of Egypt’s broader strategy to modernise its financial services sector and expand access to financial tools.

Saudi Arabia

Regulatory sandboxes in Saudi Arabia, the UAE, and Egypt allow fintech startups and financial institutions to innovate within controlled environments. This encourages the development of new business models without compromising the stability of financial systems. Strides in regulatory measures across these countries also ensure the security and reliability of instant payment systems, thus enhancing consumer adoption.

Emerging technologies in digital payments

The MENA region’s rapid advancement in instant payments is propelled by several emerging technologies that enhance the security, speed, and versatility of transactions. These technologies ensure robust transaction processing frameworks that align with the demans of a digital economy.

Artificial intelligence (AI) and machine learning (ML)

AI and ML make instant payment possible by improving fraud detection through pattern recognition and anomaly detection, optimising risk management, and personalising customer experiences based on behavioral predictions. These technologies also streamline payment routing for efficiency, ensure compliance with regulatory changes, and automate customer support, thus boosting both the security and user-friendliness of financial transactions.

Real-time analytics

Managing the vast data generated by instant payment systems is enabled by real-time analytics tools that help financial institutions monitor transaction flows, predict trends, and provide better services to customers. Real-time data processing ensures that financial institutions can make informed decisions quickly to deliver on the promise of instant payments.

Open banking

A critical component of MENA’s financial technology landscape is increased adoption of open banking, which allows third-party developers to build applications and services around financial institutions. Open banking systems leverage Application Programming Interfaces or APIs to create a connected network of financial institutions and service providers, enabling more seamless and transparent financial transactions.

This framework is pivotal in fostering an ecosystem where consumers can benefit from tailored financial products and services, thereby transforming how consumers and businesses interact with financial services.

Payment gateways

Payment gateways enable instant payments, acting as infrastructure intermediaries that ensure the secure and efficient processing of transactions. These gateways handle the real-time authorisation and execution of payments, integrating with banking systems to facilitate swift fund transfers. Advanced security measures, such as SSL encryption and tokenisation, along with compliance with regulatory standards like PCI DSS, help protect sensitive transaction data and build consumer trust.

Moreover, payment gateways support a variety of payment methods — from credit cards to digital wallets and cryptocurrencies — accommodating the diverse needs of a global consumer base. This adaptability is key to expanding the reach and functionality of instant payment systems, making them integral to the growth of e-commerce and the broader digital economy.

Impact and regional growth

The impact of real time payments is profound. They offer enhanced transaction speeds, 24/7 service, and improved security and transparency. These features meet consumer and business expectations for efficiency and safety and support the economic diversification strategies of MENA nations.

For instance, in Bahrain, a leader in consumer adoption, nearly 60 per cent of electronic payments are processed in real-time, a figure expected to rise significantly by 2027, underscoring the growing reliance on and trust in digital transactions.

Future outlook

The rise of instant payments in MENA region will only accelerate, supported by ongoing technological advancements and government backing. The adoption of ISO 20022 enhances data quality and global compatibility, crucial as MENA integrates further with the international financial system.

Competitive pressures from new digital entrants are accelerating digital transformation, establishing MENA as a leader in financial technology innovation. This commitment advances the region’s economic frameworks but also sets new global standards, underscoring MENA’s role in shaping the future of global commerce through continuous innovation and investment in advanced technologies.

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