When focusing on the Fintech scene in the Middle East, the clear leader in the region comes from paytech. Whether that’s payment solutions for businesses, e-wallets or digital/electronic payments, paytech is a sector that is particularly thriving, with around 85% of MENA fintech firms operating in the payments transfer and remittance sectors.
We spoke to several leaders in the industry to understand some of the key trends currently in the paytech space, as well as some of the challenges and what the future holds for the sector.
Rise and Xare
Rise and Xare’s CEO and co-founder – Padmini Gupta, believes that digitisation is one of the key trends in the space.
“The digitisation of money will lead to a big win for tech-savvy business and paytechs in general. We see this digitisation as a huge opportunity for rise because of our focus on migrants who have largely used cash as a means of payment. Our entire product range allows for migrants to save, protect, and share their money without the use of cash.”
“My home country is the US, and I see it’s been a hotbed of big tech getting in on finance. With the launch of apple family pay, a proposition that actually validates Xare’s proposition of sharing money, we feel that there is an opportunity for growth even in the most developed of markets.”
Mohammad El Saadi is the co-founder and CEO of Mamo, a Fintech start-up based in the UAE. He agrees with Padmini, and said that though digital payments have been around for a while, the focus in MENA has been on digitising e-commerce payments and online card acceptance.
“Digital wallets are actually a relatively new space for the region. There is a very real gap in the market when it comes to easy movement of money for and by individuals. We still see a huge reliance on cash and bank transfers which can be quite cumbersome.
“When it comes to small businesses, getting access to a payment gateway is a long and painful process, sometimes taking over two months to set up. While the demand exists, the lack of immediate and responsive services and the presence of high fees make the adoption of digital payments slow.
“Despite the challenges, there is a growing demand for customer-centric payment solutions. We are witnessing some major trends in paytech in the MENA region. According to Juniper Research, digital wallet users are expected to exceed 4.4 billion globally by 2025, up from 2.6 billion in 2020. The UAE is currently spearheading in this space through increased collaboration between fintechs, banks and the government.
“The pandemic has shifted the landscape for SMEs with more home-businesses popping up than ever before. 82% of UAE businesses said their investments in digital payments will play a major role in their business recovery, and when asked about payment habits during the pandemic, 60% of them mentioned that contactless payments were the preferred payment option among their customers.
“Increasing demand along with government initiatives has propelled the development of a robust PayTech ecosystem of local and international investors, technology companies along with accelerators and incubators that will further promote innovation and development of excellent products and services that could compete with their Western counterparts.”
The BENEFIT Company
Yousif AlNefaiei, Deputy Chief Executive – Business Development & Services at The BENEFIT Company, joined BENEFIT in March 2006, bringing over 25 years of industry experience. He agrees that digitisation is a key trend currently, but also believes e-commerce is gaining more and more traction in the region.
“The Middle East & Africa is a promising region when it comes to e-commerce,” he said. “It has a much bigger role to play now in the region as the majority of businesses and SMEs have to transition and create an online presence. According to a whitepaper by DHL, the global B2B e-commerce market size will grow by 70% and will reach $20.9 trillion by 2027, and 80% of all B2B sales interactions between suppliers and business buyers will take place online. Payments are a crucial part of that shift of moving operations online.
“There will be more online payment solutions and services designed specifically for SMEs in the region. Adoption of paytech to digitise payments and attract rewards is helping SMEs extract value for their business.”
Though digitisation is seen as a huge opportunity in the fintech space, Yousif also warns that we will likely see more criminal activity because of it.
He said: “There are a few challenges I’d like to definitely highlight. One, there are long-standing cultural factors driving the preference for cash payment in this region. Two, are the rising rates of cybercrime and fraudulent activities in MENA. Usually, our region hasn’t been a target for these attacks but due to the rapid digitalisation happening, this has led to an opening of new gateways for cyberattacks. if we want to witness rapid growth in online and digital payments, we need to bridge the gap between preventing fraud and cyber risks and ensure a seamless and quick user experience.
Ramana Kumar is the Chief Executive Officer of Magnati, which is the payments subsidiary of First Abu Dhabi Bank (FAB).
“Paytech in MENA is going through massive disruption driven by technology changes and behavioural changes of consumers,” he said. “The challenges around core payments services revolve around providing invisible and seamless payments experiences and ensuring no fraud or compromise in parallel. In addition, the challenge of differentiating and moving beyond the base of core payments services creates the opportunity for value-added services such as platform services and next-generation technologies that reduce IT investments for merchants and corporates. Magnati offers innovative solutions that help businesses unlock payments growth opportunities.
In terms of the future for payments, Ramana believes that seamless, frictionless and invisible payments will be the way forward. “Payments will no longer be transactional but instead, will act as a base for new revenue opportunities for all merchants and corporates. Magnati is using technologies like AI and machine learning to help transform payments data into new ways of attracting customers, introducing products and increasing sales. The future is all about a single platform that can provide many options through custom API integration.