Harnessing e-payments into a seamless experience

Contrary to virtual reality on the World Wide Web, e-commerce is not a single, unwalled entity where consumers wander in and out sans boundaries. A transaction that takes a few clicks on an online destination located halfway across the world is backed by checks and balances hard-wired into local regulatory, cultural and economic reality.

E-commerce is expected to double in value by 2020 in the Middle East and North Africa (Mena), contributing 5 per cent of GDP from the current 2 per cent, research shows. The Gulf Cooperation Council (GCC) countries are among the fastest growing in this sector, with an estimated expansion of 40 per cent in e-commerce by 2020, taking the figure to $41.5 billion (Dh152.42 billion).

The UAE is expected to command a market share of 53 per cent, followed by Saudi Arabia at 14 per cent, Oman and Qatar at 12 per cent and 10 per cent, respectively. From $2.5 billion (Dh9.2 billion) currently, e-commerce in Dubai is expected to touch $10 billion (Dh36.7 billion) by 2018.

As one of the largest payments processors serving the region, with revenue five times larger than our closest competitor after our recent acquisition of Emerging Markets Payments (EMP), we act on the premise that e-payments that enable this fast growing sector are best served by a scalable platform that can be built on with the appropriate amount of local focus. Each location is its own universe with unique transactional characteristics.

E-commerce businesses thrive when they address pain points unique to their catchment areas. Similarly, e-payment solutions that support the sector need to offer location-specific and low-cost cutting-edge technology solutions within the regulatory frameworks mandated by central banks and regulators. In some cases, e-payment solutions that respond to the pain points of local businesses drive new business opportunities.

A responsive e-payments platform takes into account, for instance, that in Dubai alone, the number of currencies handled by a retailer on any given day is dramatically higher than in many other major world cities. Cashiers are used to being handed everything from dinars to dollars and roubles to rupees as payment — online and in-store.

In this market, much more than any other, online dynamic currency conversion, which lets the consumer instantly see what the limited edition watch that he or she is planning to pre-order online costs in, say, yuan, is a necessary enabler.

The growth of e-commerce in the Mena region from $95 billion in 2013 to $200 billion in 2020 rests on transactions spanning across new acronyms — business to customer (B2C) e-commerce is expected to represent 30 per cent, government to business or customer (G2B/C) 25 per cent, and business to business (B2B) 20 per cent.

Even as savvy merchants identify opportunities under these headings, as a regional payments processor, enabling ease of processing across C2C, B2C, B2B and G2B/C via partnerships, acquisitions and innovation is part of our mandate.

Although the per capita retail spending online in the UAE is at par with the US and the EU, e-payments in the MENA region are significantly different from those in, say, Europe or Asia. In the GCC, unlike in many other economies, the presence of large, dynamic offline retail presents its own challenges.

For the consumer, a mall trawl is often a lifestyle experience rather than a shopping errand in this region. An online business model that attempts to mimic bricks-and-mortar retail is unlikely to replace the mall experience and may not be the best route to tapping the e-commerce opportunity.

E-commerce could, however, have far more potential in other sectors. For instance, apartment hotels that charge periodic fees from landlords who are abroad can save a considerable number of business hours and revenue by raising invoices via an online platform rather than relying on traditional means of payments.

Since we launched Network Online (NeO) in October 2015, merchants in the UAE’s hospitality sector tell us that consumers, particularly those from the region, like the freedom that prepaid, or shall we say e-paid, spa sessions and room reservations offer them, taking away the worry of presenting a credit card at every point. It’s a winner; and it’s created by the region, for the region, in the region.

E-commerce in the UAE also has the potential to be the go-to solution for small and medium enterprises, with many small retailers venturing into this space. But when it comes to transactions, they report that cash-on-delivery and return rates affect both scalability and cash flow.

Given historical trends in evolving e-commerce markets, this is not a concern. Even in the early stages of e-commerce in the US, cash-on-delivery dominated the market. However, it is imperative that processing barriers do not affect the potential of this booming sector.

To respond to this, Network International partnered with international payment provider Nexxus, together providing an online store and payment facility, and Aramex, which added a built-in logistics and transportation solution, to create NexxusPay. The result is an end-to-end e-commerce solution for SMEs in the UAE.

Clearly, imported vanilla solutions need a local flavour to become palatable. In one example, last year we enabled the global online payment processing giant, PayPal, on our backbone. With it going live, UAE-based merchants can now accept payments from anywhere in the world, without having to set up a dollar-denominated account.

What more can a regional merchant ask for?

The writer is CEO, Network International.