The Middle East, North Africa and Pakistan (MENAP) may be one region, but it’s certainly not one, homogenous market. And nowhere is this disparity clearer than how people choose to pay. Payment habits have developed over time and are formed by various factors, many of them cultural, some political or economic, others to do with technology and infrastructure.
While the use of cash was once widespread in the region, its usage is declining. Our latest research finds that 60% of consumers in MENAP and almost 75% of consumers in the GCC countries now prefer to pay for ecommerce purchases with a digital payment method. That’s up from 20% last year.
The payment methods replacing cash are hyper-localized, and businesses need to pay attention to the role that payments play in regional expansion. But how can they turn theory into practice? And how can merchants do this in a way that is cost-effective and easy?
Simplifying local payment complexity
Understanding what payment methods to offer in MENAP isn't straightforward. Visa and Mastercard are present, yet their penetration varies from market to market. And often, they're not the most common way for consumers to pay.
Instead, consumers typically leverage the diverse range of local payment methods available in each market. For example, in Saudi Arabia, there's mada, the domestic debit card scheme. In Kuwait, there's KNET, Farwy in Egypt and QPay in Qatar. These local payment methods dominate — accounting for more than 60% of all transactions in some markets.
Understanding what payment methods are available and popular in each market is only half the challenge, however.
That's because businesses have traditionally needed to take on additional costs and complexity to offer local payment methods. This comes from needing to establish individual agreements with each local payment method provider. There's also the need to integrate and maintain the connection with each payment method's API.
The antidote to this operational complexity: let your payments provider do the hard work for you. At Checkout.com, we've connected with all the region's popular local payment methods. That means businesses using Checkout.com have access to these local payment methods through a single API connection.
On the theme of simplifying operational complexity, we also eliminate most of the back-office bureaucracy. Businesses leveraging Checkout.com don’t have to find and maintain contacts at each local payment scheme, negotiate rates, request merchant IDs, complete paperwork and so on.
With the complexity of connecting to the various payment methods out of the way, businesses can maximize their growth potential in the markets they operate in across the region. And, when they move into a new market, they can be offering the preferred local payment methods from day one often leading to higher conversions, better acceptance and more revenue.
"Checkout.com is integrated into all the region's most popular local payment methods. Turning them on and configuring them within our existing integration was straightforward. And because all our brands connect to Checkout.com through one API, we’re able to make the payment methods live across our entire portfolio."
Red Bamba, Digital Payments Manager, Alshaya
Accept and optimize
Once businesses can seamlessly offer these payment methods across all markets, their attention and resources can focus on optimization. With access to the right data, businesses can start to understand what payment methods maximize revenues across all manner of vectors.
More importantly, they can begin to test different payment methods without incurring any additional cost or risk. For instance, we've partnered with many businesses to run experiments to see how they can harness local payment methods to achieve their business objectives.
These have led to some outstanding results. For example, our tests using local payment methods for OSN gave them the confidence to stop accepting cash payments. This allowed them to cut costs and also acquire more customers.
Acceptance rate increase
"MENA's payment landscape is complex but Checkout.com cuts through that complexity showing us what payment methods to offer to drive conversion and lower churn. And they allow us to switch them on quickly."
Delivering the payments experiences customers crave
The key to commerce is turning browsers into buyers. It’s about persuading people to purchase and leading them successfully through the entire checkout process. Increasingly that means providing the payment experience they expect. And in a dynamic region like MENAP, those expectations evolve quickly.
For instance, we've seen an explosion in the usage of buy now, pay later (BNPL) in the past year. Our latest research shows that 24% of consumers used BNPL in the past year. A further 29% intend to do so in the next 12 months.
It's a similar story with digital wallets. Sixty-six percent of consumers say they plan to leverage this payment method next year. Fifty percent also plan to start using cryptocurrencies.
These evolutions in consumer behaviors create both challenges and opportunities for businesses. A challenge because they must ensure they can offer these payment methods without incurring additional costs and complexity. And an opportunity because the region's digital-savvy consumers are increasingly looking to align with those businesses that create seamless payment experiences.