When you combine three forces – a young demographic, an aspirational market of travellers and strong mobile adoption – it stands to reason that the future for online and mobile payments is bright in the Middle East.
Spending is on the rise, says Remo Giovanni Abbondandolo, vice president of business development in the Middle East and North Africa for global payment solutions provider, Checkout.
“Mobile spending is among the highest worldwide and tourists in Dubai spend the most of any city," he says. "This year, mobile spend is forecast to reach AED 20 billion, with 25% growth expected in 2020.”
There’s also growing trust in online payments as consumers get used to the convenience, he explains.
“We are seeing the use of cash decline across the region. Now for many of our merchants, cash no longer represents the preferred method of payment for their customers. But due to the high-value basket value of online travel agencies, consumers are still cautious about these transactions.
“Checkout is working to reduce the friction points for purchases and help increase consumer trust in purchasing online. This is also thanks to more convenient digital alternative payment methods recently introduced such as Apple Pay.”
Easier regulation on the way
Says Abbondandolo, who joined Checkout from Travelstart where he spearheaded the South African company’s entry into the Middle East: “The introduction of a legislative framework paves the way forward for greater online payment adoption in the region. This serves to open the market up for brands, especially online travel agencies.
"UAE seems to be leading the way on this, but we are also seeing similar trends in countries such Saudi Arabia after the introduction of Mada for online payments and overall ease of doing business in the country.”
Despite these underlying trends, which augur well for the outlook of the online travel market, Abbondandolo, who has been based in Dubai for the last decade, says that for many global brands, “the Middle Eastern market remains a distant mirage in the desert."
“With affluent, tech-savvy consumers the region seems perfect for any global brand seeking to expand. However, expansion to the region cannot simply be a replication of other rollouts but requires a nimble effort to localize and localise well.
“The combination of language, high smartphone usage, a broad set of spoken languages, large expat community and a complicated payment ecosystem all work to create a high barrier to entry.
"I expect to see a great degree of consolidation taking place, with global brands partnering with local providers to help them navigate the complex landscape where payments will play a big role.”
This is where Checkout, which set up a Middle Eastern presence in 2014, sees the opportunity for itself.
Its priorities are to keep localising – “we need to ensure we are able to offer all local payments to both our local and international merchants, such as Fawry in Egypt, OmanNET in Oman and K-Net in Kuwait” and to facilitate the entrance of global players in the region.
All this while helping local companies to expand globally, and work closely with local players to increase adoptions of online payments, such as local regulators, issuers and acquiring banks, says Abbondandolo.
Being local
Checkout, which has tripled office space in Dubai and is set to open other offices throughout the region, has been making good strides in partnering with global brands to better serve the Middle East market.
“For example, Checkout.com was the first online payment service provider to enable Mada, Saudi Arabia’s domestic payment network with Flyinn. Other global brands like Adidas, Samsung, Deliveroo and The Entertainer, have utilised our local knowledge to help them realise their growth aspirations," says Abbondandolo.
Specifically, in the travel business, we are proud to support companies such as E-Traveli, Travelstart, Hopper and Headout, as well as local players such as Almosafer, Rehlat, Cleartrip and Tajawal.”
In many ways, Abbondandolo, who has also spent time in the Asian travel markets, sees similarities between the two regions with both having fragmented payments markets.
He explains: “We are fixing some of the greatest challenges the online travel businesses are facing, by offering local payment methods, in-country acquiring, risk management and payment processing. What previously required multiple companies, we offer on the Checkouk.com platform via a single API integration.”
In the crowded landscape where global brands are competing with a plethora of local players, Abbondandolo said the local brands’ advantage is consumer trust.
“Local brands are well-versed in the nuances of the market and as such, enjoy greater levels of trust. For many, they have an emotional or nostalgic connection to a brand. This degree of trust is an important one for the MENA market, as trust is often the biggest barrier for online purchases.
He continues: “However global brands such as Deliveroo and Uber have helped to challenge the status quo of the cash on delivery (CoD) payment methods and boost consumer confidence in online payments. Global travel companies like Wego also identified very quickly the right time to enter in the MENA, the right talent to hire locally and the customers’ needs.
"They have also delivered a consumer experience that is consistent anywhere in the world. The sheer scale and resources of these organisations have increased adoption levels of online payments and work to build consumer trust.”
For Abbondandolo, the Middle East travel market offers great opportunities.
He says: “The market is going global – consumers are being offered a greater choice of destinations than ever before. Increasingly they are opting for European or Asian destinations, over previous regional favourites.
“The prime demographic is young, affluent and tech-savvy which makes the Middle Eastern audience a key target for any travel brand.”
* This article originally appeared on WebInTravel.
Know your Middle East
Find our more at WebInTravel Middle East on April, 9, 2019.