The Middle East, North Africa and Pakistan (MENAP) is a truly unique region. While every market has its distinctive elements, those differences, fragmentations and complexities exist at a whole other level in MENAP. Payment methods, currencies, culture, regulation, infrastructure — all of these factors vary from country to country.
So while digital payments offer a passport to more integrated economies, there’s still a hurdle to jump just to get those digital payments working from country to country. Overcoming this will be crucial to unlocking the prosperity gains that can follow.
Evolving consumer behaviour
A key observation for the region is that MENAP’s payments landscape is exceptionally dynamic and constantly changing. A trend that is only accelerated by the impact of the Covid-19 pandemic. This region has a young population, and when new payment methods come along, people are hungry for change and quick to adapt and adopt.
We have surveyed the regional population and partnered with Visa to produce two research papers since the start of the pandemic. Our data shows an 80 per cent decline in cash use in the region since the start of the pandemic. Moreover, year-over-year, we see a continuous decline in the preference for cash across the region. This decline in preference for cash is pervasive. It is particularly pronounced in traditionally cash-centric countries. In Pakistan, for example, 13 million people have shifted from preferring cash on delivery to a digital payment preference in the past 12 months.
What’s interesting here is that, across the region, we are not simply witnessing a forced change in behaviour due to initial pandemic protocols. Rather, a genuine shift in consumer mindset has been triggered and is growing, even as lockdowns ease and vaccinations restore relative normality, particularly in the GCC region.
Experience has taught us that new methods are quick to overtake the pre-existing ones in the region and hence dynamics can change rapidly for merchants. What does that mean in practice? Some years ago, merchants who offered cash on delivery but not cards would have been losing only between 5 per cent and 10 per cent of potential business. Today we can flip that dynamic on its head.
When trends shift fast, merchants need to be on the pulse to capture and hold on to market share. In such a fast-paced region, standing still is not an option.
Unlocking new opportunities
At Checkout.com, we give merchants the payment capabilities they need to power their growth. Our reliable cloud-based payments platform is built with agility in mind. We allow merchants to access all local currencies and quickly adopt popular local payment methods through one single API integration. This gives them access to the newest, most appropriate payment method as soon as it becomes available. But crucially we also offer local APMs. Checkout.com was the first PSP to launch mada when it was introduced in Saudi Arabia. We also offer Fawry in Egypt, Qpay in Qatar, and Knet in Kuwait. This is not only vital if you want to capture significant market share, but this kind of true localisation is key to gaining trust and brand loyalty in the region.
Keeping a step ahead of the market is also one reason we invested in the leading buy now, pay later option, Tamara. As our research shows, BNPL has seen meteoric growth in MENA in the past 12 months. A quarter of the region’s population has used a BNPL option in the past 12 months, and a forecasted 53 per cent of the population intends to use BNPL in the next 12 months. This committed future focus is why we continue to scan the market to be ready for new digital payment methods that are yet to come.
But in such a dynamic and diverse region, the best technology only gets merchants so far. There’s a crucial human element to solving for complexity in MENA that mustn’t be overlooked. Our expert teams on the ground live and breathe the day-to-day challenges of payments, issuing and regulation. We help cut through the complexity and allow merchants to grow and scale across borders with ease.
Relationships are vital in the region, perhaps more so than anywhere else in the world. Checkout.com’s team is deeply embedded with local partners and can share the benefits of these insights and relationships with our merchants. A key example is the partnerships we have with issuing banks across all markets in the region. These relationships allow us to optimise payment acceptance rates for our merchants.
The beauty of working in the MENAP region is how diverse and richly nuanced it is. For this reason, merchants need expert support and advice which is personalised by a trusted partner. That’s why we provide our merchants with round-the-clock service to ensure that they’re able to maximise their payments potential and grow their businesses well into the future. And what an exciting future this is set to be for MENAP.
Download Checkout.com’s new report to get exclusive insights into how businesses can meet the expectations of consumers across MENAP.
The writer is Senior Vice-President of MENA, Checkout.com