The MENA region has now crossed the tipping point toward online payments over cash. MENA is the collective name for Middle Eastern, North African, and Gulf Cooperation Council countries. Currently, Egypt, the Kingdom of Saudi Arabia (KSA), and Nigeria dominate ecommerce and e-payments in this region – however, due to uneven technology distribution in Nigeria, this editorial piece cannot address it.
Indeed, MENA is a promising yet demanding market when it comes to fintech. The main challenges that MENA payment providers confront are determined by the specifics of the region's payments landscape.
Naturally, the MENA market did not take off overnight. It has been developing for decades, accelerating since the beginning of 2020. According to the MENA Fintech Association (MFTA) report, COVID-19 was one of the major drivers that had a profound impact on market growth. McKinsey’s survey states that in the wake of the pandemic, non-cash payments had risen by 10 to 20%, according to different estimates across the region. In the future, online payments will continue to grow rapidly, and by 2023, non-cash payments across the Middle East are expected to account for 69% of transaction volume compared to 45% in 2018.
The above-mentioned data indicate the fast-paced development of the MENA fintech market. Nevertheless, it is still evolving, which is why payment providers have not yet overloaded it. If you have ever considered becoming a payment provider in the MENA region, the timing is just right: the market has plenty of room for new payment players to enter the field – and a lot to offer. Then again, this will not last forever. As the market grows rapidly, software deployment speed is imperative. Developing a payment solution from scratch takes plenty of time and resources, so payment providers may consider alternative options.
With fast time-to-market as a key factor, white-label payment solutions are worth exploring. Payment orchestration platforms are currently top-notch in the field. The catch is that most platforms tend to offer a Software-as-a-Service (SaaS) purchase model, which conflicts with governmental regulations.
The MENA countries strive to develop independently – therefore, many of them require the payment infrastructure to be hosted within the country. For instance, the Saudi Arabian Monetary Authority (SAMA) regulates payment service providers in the KSA. In recent years, the number of licences issued by SAMA has increased threefold from year to year. Furthermore, MENA regulations are evolving alongside ecommerce. Saudi Payments, a technical regulator of payment service providers in the KSA, was recently established, following the market's maturation and the arrival of new international payment players.
A payment solution for the MENA countries with the above-mentioned regulations has to be deployed either on the cloud or on the dedicated infrastructure of the hosting provider. Another factor to consider is that cloud infrastructure is only available in some regions of MENA. For instance, Amazon Web Services (AWS) is available in the United Arab Emirates (UAE) and the KSA but not in Egypt.
Although credit and debit cards are widespread in the region, there are also local payment methods like Mada Cards and STC Pay in the KSA, KNET in Kuwait, and NAPS in Qatar. Therefore, it is a ‘must’ for MENA payment solutions to have local payment providers integrated.
The exponential growth of payment infrastructure in the MENA countries occurred later than in Europe and the US. In response, the MENA market now strives for new technologies, instantly embracing payment innovations like Google Pay and Apple Pay, tokenization, and mobile payments.
Banks’ payment infrastructure in MENA relies primarily on CyberSource and Mastercard Payment Gateway Services (MPGS), designed for banks. They implement merchant management, smart routing and cascading, invoicing, billing settlement calculation, and so on, at a basic level. The efficient consolidation of payment channels requires a combination of advanced payment solutions like Akurateco with CyberSource or MPGS.
Considering the listed challenges, payment software for the MENA region should be highly flexible, adhere to local regulations, offer an on-premise setup, and work on cloud or dedicated infrastructure available in the area.
Akurateco’s payment orchestration platform is a customisable white-label payment software with a multi-acquirer approach and advanced technologies that optimise the payment flow, a high-end payment solution tailored for MENA-based payment providers:
It combines all the cutting-edge technology of payment orchestration but, in contrast to the SaaS payment platform, requires software to be installed on a dedicated or cloud infrastructure, complying with governmental requirements.
It has a multi-acquirer approach and offers a variety of integrated payment providers and banks. For instance, Akurateco has 200+ payment connectors worldwide, including CyberSource and MPGS, and develops new integrations with local banks and payment providers upon request.
Efficient consolidation of payment channels ranks high among payment orchestration functions. It is a unified software layer that handles all the payment channels on one platform and combines state-of-the-art technologies, including smart routing and cascading, automated billing and invoicing, and merchant onboarding.
The growth of ecommerce and online payments in the MENA region in recent years cannot be overestimated. Currently, there is plenty of room for new players to enter the market, especially with innovative technologies and solutions. Despite MENA’s infrastructural challenges, there are payment providers ready to meet market demands, and our on-premise white-label payment orchestration platform, tailored to MENA needs, is among them.
This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2022–2023, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally.
Vladimir is the Managing Partner at Akurateco Payments Orchestration Company, founded in 2019. Since 2020, Vladimir has been leading the overall management of Akurateco, which delivers easily customisable PCI DSS-certified white-label payment software to payment service providers and international merchants.
Akurateco Payments Orchestration Platform offers an advanced end-to-end payment solution from merchant onboarding to accepting payments from your customers. We act as a connectivity box with 200+ worldwide payment integrations and help businesses build, manage, and optimise connections to payment gateways and payment methods, achieving up to 30% revenue gain.
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