Arab world could see US$69 billion in online payment transactions per annum by 2020

PAYFORT, the leading online payment service provider in the Arab world, has announced its third “State of Payments in the Arab World” report, offering up-to-date data and insights in the region’s payment trends and consumer buying habits. Based on the seven key country markets studied, the region saw a 23 percent increase in online payments during 2015, led by strong growth in Saudi Arabia and the United Arab Emirates, showing 40 percent and 24 percent year-on-year growth respectively. Meanwhile, the report forecasts that the volume of online payments could increase nearly three times by the year 2020 to reach more than US$69 billion of transactions per annum.

PAYFORT’s State of Payments in the Arab World, which has become the standard reference for payments and ecommerce trends in the region, has been expanded and enhanced again this year to include more consumer buying data and insights into consumer behavior in the region. Focusing on the seven key markets which PAYFORT operates in (Egypt, Jordan, Kuwait, Lebanon, Qatar, Saudi Arabia and the UAE), the report tracks online payment transactions in the airline, travel, ecommerce (online shopping) and entertainment sectors.

“Our research team has been very focused on how to make this annual report as useful as possible for businesses in the region,” Omar Soudodi, Managing Director of PAYFORT. “So, in addition to exploring current trends and future predictions, this year’s report aims to shed some light on some of the real issues that impact merchants on a day-to-day basis and present actionable insights and possible solutions for the future.”

The new report shows strong growth in online shopping across different sectors, with transactions in the airline sector increasing by 18 percent from 2014 to 2015, in the travel sector by 39 percent, in the ecommerce sector by 31 percent and in the entertainment sector by 34 percent. The region’s largest markets Egypt, Saudi Arabia and the UAE led most sectors in terms of volume and year-on-year growth, with the exception of the entertainment sector, where the UAE had about ten times the volume of online shopping transactions in 2015, compared to its nearest country competitor.

The acceptance ratio across the region, indicating consumer acceptance to pay online, continues to grow. Egypt, Jordan, Kuwait, Qatar, Saudi Arabia and the UAE all now have more than 50 percent acceptance for online payments, with Saudi Arabia and the UAE having the highest percentages, at 58 percent and 71 percent respectively. Airline bookings and business-to-business marketplaces saw the highest acceptance rates in Saudi Arabia and the UAE, with ecommerce proving most popular in Egypt, travel services in Kuwait and Jordan, travel and entertainment in Lebanon and airlines, entertainment and B2B marketplaces being most accepted in the State of Qatar.

The State of Payments 2016 report features an extensive section on consumer buying habits in the region, to include key influences for shoppers, buying behaviours and consumer preferences for products and services. With more than 61 percent of the population in the countries surveyed buying online, understanding differences in consumer behavior between different markets and demographic groups has become vital for businesses relying in online transactions.

“As competition grows and online consumers become more sophisticated, understanding the unique demographics and habits of Middle East consumers becomes all the more important for online businesses,” said Soudodi. “This year’s State of Payments report will provide businesses with a broad range of useful information on Middle East consumers.”

The UAE continues to lead the region in terms of adoption with 71 percent of the country shopping online, whilst Jordan lags further behind since only 50 percent of its population are online. However, the report shows that there are some clear differences between consumer habits and preferences country-to-country. For example, the top two product categories bought online in the UAE are flight tickets and clothes, whilst in Egypt these are mobile phones and utility bills, in Kuwait and Saudi Arabia the top two items purchased are flight tickets and utility bills.

The role the Internet plays in consumer shopping remains varied, with 17 percent of shoppers stating that they complete their entire shopping journey online and 67 percent relying on online research. Nine out of ten consumers surveyed said that they check product reviews online before making an online purchase.

Meanwhile, trying to encourage consumers to use online payment options can have its challenges and many of these stem from consumer resistance to new payment methods and technologies. Cash-on-delivery remains the preferred method of payment for 51 percent of Arab shoppers: a percentage that soars to 70 percent in the case of online shoppers in Egypt.

“Despite the enormous growth in the number of consumers buying online, there are still many challenges for Middle East businesses,” said Soudodi. “Fear of electronic payments, fear of fraud, fear of new technology and a lack of trust in online services all remain significant obstacles for consumer marketing in the region. Meanwhile, the consumers that are paying online demand faster and easier checkouts, while simultaneously expecting increased security. Rising expectations put a lot of pressure on merchants.”

Credit card adoption across the region varies greatly between countries, with Kuwait and the UAE having the highest penetrations of 97 percent and 89 percent respectively. Qatar and Saudi Arabia have about 45 percent adoption and Lebanon just 15 percent credit card penetration. Amongst those consumers that pay online, most consumers registered a significant level of confidence in payment security and confidentiality, although much less confidence in online privacy.

“PayFort is focused on helping businesses in the region take their online sales and payment options to the next level, by making it easier, faster and more secure for them to offer their customers a choice of online payment options,” said Soudodi. “By integrating new technologies, new payment channels and advances in fraud prevention and risk management, PayFort allows merchants to offer customers the latest payment options, while focusing on their core business.”

“We hope that State of Payments in the Arab World 2016, our third and most extensive research report to-date, will prove to be a valuable source of information and inspiration for the region’s merchants during the year to come,” continued Soudodi. “We expect the report to be as valuable to new online players as it is to the more experienced online businesses in the region.”

The report’s analysis is derived from the markets in which PAYFORT operates (Egypt, Jordan, Kuwait, Lebanon, Qatar, Saudi Arabia and the UAE) and is available at no cost for those who register at www.stateofpayments.com