The Covid-19 pandemic has hastened a dramatic transition in the financial services sector. The prominence of cash payments in the region has gradually decreased over the years, in tandem with the increasing proliferation of smart technology, digital payments and mobile penetration.
According to a new report by MENA Fintech Association, almost seven out of 10 payment transactions in the Middle East will be non-cash in 2023 as the region catches up with the global trend towards a cashless economy.
Benefit for businesses
Cashless payments can benefit businesses and consumers with operational efficiency, scalable recurring revenue, more productive workplaces, and even long-lasting rewards. Leading players in this domain, such as PayerMax, are aiming to empower merchants in the Middle East by creating more convenient, safe, and faster ways to pay. “Digital payments benefit merchants, users and the entire ecosystem,” says Sianna Wu, senior vice president – MEA at PayerMax. “For instance, for users, being able to pay online and going cashless, they will be able to access the digital economy. In addition, they can access global products and services that might not otherwise be accessible locally and have generational learning impacts.”
Wu explains that PayerMax’s omni-method disbursement solution is an example of how it is enabling the gig economy in MENA in a post-Covid industry. By enabling its merchants to provide MENA’s youth, previously marginalised populations to pay and be paid online, creating a passive revenue stream on social media or job platforms. She says having more digital transactions than cash has three significant impacts on businesses. “First off, there are several logistical and security issues with cash transactions. Second, the Middle East sees a substantial increase in cashless transactions driven by high smart-phone penetration rates. Following the market’s overall trend is advantageous for organisations. Businesses may use various strategies to increase the conversion rate of online transactions, such as partnering with solutions such as PayerMax, where we provide omni-method options that are inclusive of the underbanked or non-card carrying population. Due to the ability to take payments online, businesses may expand their reach and experience growth within the fragmented payment landscape in MENA.”
“Lastly, in terms of the ecosystem, cashless payments enable a three-sided impact by connecting and offering more payment methods. It means that the businesses offering products can reach more users, and users can pay online with methods that previously weren’t available.”
UAE at the forefront of digital payments
In the UAE, non-cash transactions are growing faster and will account for 73 per cent of payments in 2023, according to the report. The data from the report also showed that in the UAE, business-to-business transactions account for the highest volume of cashless transactions, followed by business-to-consumer, with businesses accounting for the lowest percentage of cashless transactions.
Meanwhile, the UAE’s e-commerce turnover has grown from $5bn in 2015 to $19.8bn in 2020 and is forecast to hit $27.1bn in 2022, according to a Fitch forecast. Wu believes one of the factors for this growth is the high mobile penetration rates in the region. “Apart from the boost in usage of smartphones, we are seeing a high card-carrying population in the UAE. The critical challenge facing the market is how to connect payment acceptance for smartphone users to merchants generally without placing an undue dependence on credit cards and bank accounts to achieve interoperability and frictionless payment. Thus, technology and facilitators both play a role in this.”
Unlocking borderless payments
PayerMax is an Omni method payment solution provider, which means the company enters a market where it operates and consolidates and aggregates the different payment methods that are popular in a particular market. For instance, in the UAE, PayerMax is imminently partnering with acquirers, e-wallet service providers and telcos, covering the whole spectrum of society. International digital firms may work with PayerMax on a single-api solution and accept payments throughout the UAE’s social and economic sectors with a single API. “The UAE is a step ahead in implementing many payment initiatives such as the e& money wallet by Etisalat and being able to pay road tolls through Salik. These initiatives are great for nurturing online payment behavior for users,” adds Wu.
“Major factor to the UAE’s adoption of digital payment methods, is that these services are endorsed by trusted sources. This is where public-private partnerships come into play. The objective of PayerMax is in accordance with measures like encouraging cashless transactions or supporting a new business line that aims to enter the UAE market. Finally, it’s critical that we, as the payment industry, engage in open communication and interaction with regulators as regulated financial institutions to ensure that we are consistently a part of the sustainable growth of the payment sector. And the only way we can continue to exist is if we have a strong partnership with the regulated UAE ecosystem and invest in cutting-edge technology inside a secure, regulated environment that benefits the nation.”
The way forward for PayerMax in UAE
Wu clarifies that onboarding local retailers is not necessarily their USP or target market and instead, PayerMax’s focus is on global digital enterprises that seek to grow outside their founded geographic region. This could be empowering Middle Eastern Airlines looking to expand into Asia or that some of the top-grossing Asia-developed digital apps are considering expanding to the Middle East.
“I think solving the barriers and enhancing the speed-to-market of an international business coming into the Middle East makes us different. We provide value-added services to our global merchants such as promotion access to 2.4 Billion users through our affiliated platforms, FX capabilities, corporate strategy as a service, support and treasury management solutions,” she states.
“Moving forward, we are looking at engaging with major e-wallets, acquirers, carrier billing and FI’s in the region. Finally, I would say our contribution to the UAE ecosystem is by building the digital highway between the world’s most prominent merchants used and loved by masses in UAE and its omni-method payment methods. By doing this, we will be able to spur global growth into the region and support MENA born digital businesses to expand globally.”
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