This article provides you with an overview of current and emerging digital payment trends in MENA region, along with interesting numbers backing up each of the trends.
Digital payments in MENA region are developing at an accelerated pace, as well as the technology supporting the emerging digital payment methods. The 2022 digital payments index report, published by Mastercard, shows how digital payments are gaining momentum in MENA region. The best indicator is the fact that 85% of respondents state that they have used at least one emerging payment method in the past twelve months, while 19% didn't use as much cash. Further development of MENA region's digital payments landscape is booming as consumers are adopting more and more emerging payment options at a faster pace. Some of the trends for digital payments in MENA region are to watch out for the adoption of the BNPL option, Account-to-Account payments, the proliferation of digital wallets, and open banking.
Although some would state that cash is still king in MENA region, the digital payments index reveals that consumers are embracing the idea of a cashless society. 19% of MENA region consumers admit to using less cash in the past twelve months. Also, 64% of consumers increased the use of at least one emerging digital payment option. This includes methods such as fintech apps, SMS payments, instant payment services, and more. In contrast, the global figure for the same information is 61%. Such consumer behavior is setting up the pace for future growth, with security and convenience being top of mind.
The Buy-Now-Pay-Later option is becoming among the most popular payment methods in MENA region. 79% of respondents contributing to the Mastercard's payment index report state that they're familiar with the BNPL concept, while 45% are fully accustomed to the new flexible payment option. Providing flexible payments split into weekly or monthly installments allows consumers to gain more control over their expenses due to the irregular nature of their income. Consumers also appreciate the BNPL option for use cases such as emergencies and increasing their purchasing power overall.
Although BNPL is usually a means for digital payment within eCommerce, the flexibility of the option is driving in-store sales as well. Tabby and Paymob partnered up and provided an in-store BNPL solution, making BNPL in-store purchases available for the first time in Egypt. By doing so, merchants are adding value to their business and attracting more customers that are provided with a flexible payment option.
With giants such as Google pay, Apple Pay, and Samsung Pay being adopted by the MENA region consumers, the digital wallet trend will continue through 2023. Digital wallets will play a great role in eCommerce and POS purchases, as estimates state that 4.4 billion global consumers will use a digital wallet by 2023.
Digital wallets play an important role both for consumers and businesses. As we're slowly adapting to the idea of a cashless society, digital wallets will soon be standard practice. When it comes o adoption in the MENA region, UAE stands out as an early adopter of the cashless society trend. According to Visa, 52% of UAE consumers, as opposed to 41% worldwide, already are or plan on being cashless by 2024. On an even more positive note, 99% see how they would benefit from a cashless society. To fuel such a transition, 71% of UAE SMEs are already cashless or plan on becoming cashless by 2024.
Account-to-Account payments enable an agile approach to digital payments by linking consumer accounts to various services; e.g., paying bills and reoccurring online purchases. 81% of consumers in MENA region state that their levels of using A2A payments either increased or stayed the same over the past year. Apart from convenience, Account-to-Account payments offer flexibility in the form of changing the date on their household bills. This is a true relief for those who have irregular income flows.
Among the trends for digital payments in MENA region are also NFC-enabled payments. Customers benefit from an additional payment option for in-store purchases in case Near-Field Communication is enabled. However, the biggest winner in the case of NFC-enabled payments are merchants, specifically SMEs that are not in possession of a traditional POS solution. With NFC payments, you can turn any smartphone or tablet into a SoftPOS device. No need for additional hardware. As a merchant, you're adding value to your business by taking an agile approach to digital payments and enriching your palette of customer payment methods.
eCommerce in MENA region is in its booming era. As more and more consumers are migrating from in-store to online purchasing, the growing demand for secure and fast checkout needs to be met. This transition comes with addressing the following: the security aspect of online purchasing as well as a seamless checkout user experience. When the two key criteria are met, merchants will be looking at lower cart abandonment rates and an increase in income.
To help merchants overcome online payment challenges in eCommerce, ASEE prepared a comprehensive eBook on how to strike a balance between security and user experience.
We are seeing an increase in the use of digital payment options for everyday financial tasks. Enabled through open banking, consumers appreciate the transparency, convenience, and flexibility of fintech products. 73% of MENA region consumers are familiar with open banking, and it's a part of their day-to-day.
Regarding the security aspect, 59% feel comfortable with using their smartphones to send money to other accounts; personal or business. However, a slight concern is present as only 40% state that they would share their personal and financial information with mobile apps and third-party services involved.
Biometrics are recognized as one of the most convenient authentication methods, as 64% of respondents agree it provides a better user experience than methods such as OTPs, especially ones generated with hardware tokens. Also, consumers are aware of potential security risks regarding services storing their biometric data. Still, five out of six consumers in MENA region plan on or have used their fingerprint to make a payment in the past twelve months.
ACS, Access Control Server, enables Issuing institutions to participate in the 3D Secure program by ensuring cardholder authentication during online CNP transactions. This enables either Risk-Based Authentication or using the available authentication method such as One Time Password, SMS OTP, mobile token, or biometrics.
Risk Scoring Engine evaluates transaction risk based on information provided by 3DS Server and ACS. Depending on the level of transaction risk, online CNP transaction authentication is either frictionless or demands an additional Strong Customer Authentication method.
3DS Server enables Acquiring institutions to provide 3D Secure protection to their Merchants.
Simple integration with a webshop or mobile application grants Merchants card scheme liability shift in cases of proven online payments fraud.
3DS Mobile SDK integrates with mobile commerce applications and enables Merchants to participate in the 3D Secure program, improving the checkout User Experience accompanied by data enrichment for more accurate risk assessment.
If you want to find out more, contact our ASEE 3D Secure Team or download the datasheet.