state of payments 2016

stateofpayments.com

ABOUT THE REPORT

Welcome to the State of Payments 2016 by PAYFORT. For the third year in a row we’re releasing our annual report that details the world of payments, ecommerce and innovation

across the Arab World.

We’ve collected data from both consumers and merchants to provide you with actionable insight you can use to create a more successful, profitable and consumer focused business.

Two years ago we released our first State of Payments report, something that evolved out of a desire to increase our own understanding of consumers in the region and share that

information with the growing business community throughout the Arab World.

In last year’s report, we strived to create something that not only contained the same consumer-centric data but also presented that data in a meaningful way. We wanted to create a fuller picture that incorporated the opinions of hundreds of merchants who

interact with consumers on a day-to-day basis.

In this year’s report we’ve once again reimagined how best to share the massive amount of data that is available within the Middle East’s ecommerce sectors. To do this we have refocused the report to not only explore current trends, but also address the real issues that

impact merchants on a day to day basis and share meaningful solutions for the future.

Over the past three years State of Payments has become our favourite content piece and we’d love to hear your thoughts on the report. Be sure to reach out via social media using the hashtag #StateofPayments or contact us via email [email protected] to share your thoughts. We have also provided a feedback section within the report where you can share

your thoughts.

TABLE OF CONTENT

TrendsMarketsize

Marketsize Forecast

Acceptance Ratio

Refunds

Seasonality

DemographicsPopulation

Internet User

Online Buyers

Social Network

Buyers by Genders

Age Group

Income Level

SurveyOnline Shopping in the Arab World

What type of Products are Arab shoppers buying

How Shoppers are Influenced

Payment, Security & Privacy

ChallengesFailure from 3D Secure

Credit Card Penetration

Fraud and Risk Tolerance

Mobile Payment

Trust

E-commerce Utopia

About the ReportWhy State of Payments?

Methodology

02

14

26

39

52

63

64

65

66

73

74

81

107

109

89

90

91

92

94

96

98

100

102

105

Changes that are shaping Middle East E-commerce

10b

9b

8b

7b

6b

5b

4b

3b

2b

1b

0

20152014

UAE KSA EGYPT KUWAIT LEBANON JORDAN QATAR

8.24b

10.25b

4.63b

6.48b

4.18b

1.09b1.26b

0.73b0.78b0.55b 0.65b

0.38b0.42b

MARKETSIZE OVERVIEW

Across the region we saw very strong growth, with market size increasing by an impressive 23.3%. The largest growth occurred in Saudi Arabia, with the UAE and Egypt also performing exceedingly well. The smallest growth occurred in Lebanon and Qatar, however it is important to note that the market size of all countries studied is increasing.

Saudi Arabia’s growth was fuelled by a growing ecommerce market and an increase in online travel bookings, with these sectors representing the largest growth in the region. Egypt and the UAE in contrast saw larger growth in their events and entertainment sectors. The slowest growth occurred in Lebanon’s Airlines sector and a similar trend was observed in Kuwait and Qatar.

2 #stateofpayments

5.06b

6b

5b

4b

3b

2b

1b

0

20152014

AIRLINES TRAVEL ECOMMERCE ENTERTAINMENT

4.70b

5.62b

1.14b

1.65b

2.30b

2.84b

0.09b 0.13b

MARKETSIZEUNITED ARAB EMIRATES



3#stateofpayments

5b

4b

3b

2b

1b

0

20152014


2.20b

2.67b

0.92b

1.55b 1.50b

2.25b

MARKETSIZEKINGDOM OF SAUDI ARABIA



.001b .012b

4 #stateofpayments

5b

4b

3b

2b

1b

0

20152014


1.90b

2.18b

0.87b1.03b

1.40b

1.84b

.006b .009b

MARKETSIZEEGYPT



5#stateofpayments

1000m

900m

800m

700m

600m

500m

400m

300m

200m

100m

0

20152014


560m

2.5m 2.7m

MARKETSIZEKUWAIT



400m

130m

430m

150m

680m

6 #stateofpayments

1000m

900m

800m

700m

600m

500m

400m

300m

200m

100m

0

MARKETSIZELEBANON



7#stateofpayments20152014


280m310m

3.7m 4.1m50m 56m

400m410m

1000m

900m

800m

700m

600m

500m

400m

300m

200m

100m

0

20152014


MARKETSIZEJORDAN



300m340m

40m60m

210m

250m

1.2m 1.5m

8 #stateofpayments

1000m

900m

800m

700m

600m

500m

400m

300m

200m

100m

0

20152014


MARKETSIZEQATAR



300m320m

45m 49m38m 44m

.5m .6m

9#stateofpayments

6b

5b

4b

3b

2b

1b

0


4.70b

5.62b

2.20b

2.67b

1.90b

2.18b

.40b .41b.30b .34b .30b .32b

MARKETSIZEAIRLINES



20152014

.40b .43b

10 #stateofpayments

3b

2b

1b

0


1.14b

1.65b

.92b

1.55b

.87b

1.03b

.04b .06b

MARKETSIZETRAVEL



20152014

.045b.049b.05b.13b .15b

.06b

11#stateofpayments

3b

2b

1b

0

20152014


2.30b

2.84b

1.50b

2.25b

1.40b

1.84b

.28b .31b.21b .25b

MARKETSIZEECOMMERCE



.03b .04b

.56b

.68b

12 #stateofpayments

MARKETSIZEENTERTAINMENT



150m

100m

50m

0


95m

129m

10m12.4m

6.25m8.82m 3.75m4.15m

1.25m 1.52m

20152014

2.5m 2.7m.50m .58m

13#stateofpayments

MARKETSIZE OVERVIEW(Forecast)

Moving forward into 2020 we expect to see positive growth throughout the Middle East with countries like Saudi Arabia, the United Arab Emirates and Egypt leading the region. With more and more people moving online, Saudi Arabia is expected to see substantial growth while smaller countries such as Lebanon and Qatar are expecting more modest increases.

Both Saudi Arabian and Egyptian growth will likely come out of their booming travel sectors and increasingly popular ecommerce businesses. The UAE’s entertainment and events sector is expected to grow more than any other sector in the region as a result of Expo 2020.

30b

25b

20b

15b

10b

5b

0

20202015


10.24b

27.13b

6.48b

22.13b

5.06b

14.04b

.65b1.36b

.42b .65b1.26b

2.8b

.78b 1.09b

14 #stateofpayments

20202015

15b

10b

5b

0


5.6b

13.7b

1.6b

4.6b

2.84b

8.09b

0.12b 0.60b

MARKETSIZE (Forecast)UNITED ARAB EMIRATES



15#stateofpayments

MARKETSIZE (Forecast)KINGDOM OF SAUDI ARABIA



15b

10b

5b

0

20202015


7.06b6.68b

2.30b

8.35b

.012b .036b

2.67b

1.55b

16 #stateofpayments

10b

8b

6b

4b

2b

0

20202015


2.18b

4.35b

1.03b

2.36b

1.84b

7.30b

.009b .023b

MARKETSIZE (Forecast)EGYPT



17#stateofpayments

MARKETSIZE (Forecast)KUWAIT



2b

1b

0

20202015


.62b.68b

.002b .004b

.43b

.33b

.15b

1.86b

18 #stateofpayments

MARKETSIZE (Forecast)LEBANON



19#stateofpayments

1000m

900m

800m

700m

600m

500m

400m

300m

200m

100m

0

20202015


310m

494m

4.15m 6.90m56m

98m

414m

492m

MARKETSIZE (Forecast)JORDAN



1000m

900m

800m

700m

600m

500m

400m

300m

200m

100m

0

20202015


340m

647m

60m

180m

250m

520m

1.52m 4.09m

20 #stateofpayments

1000m

900m

800m

700m

600m

500m

400m

300m

200m

100m

0

20202015


MARKETSIZE (Forecast)QATAR



320m

480m

49m83m

44m

86m

.58m 1.26m

21#stateofpayments

MARKETSIZE (Forecast)AIRLINES



.48b

15b

10b

5b

0


5.62b

13.77b

2.67b

7.06b

4.35b

.41b .49b .34b.65b

.32b

20202015

.43b

2.18b

.62b

22 #stateofpayments

MARKETSIZE (Forecast)TRAVEL



8b

6b

4b

2b

0


1.65b

4.66b

1.55b

6.68b

2.36b

.056b

.098b

.06b.18b

20202015

1.03b

.049b.083b.15b.33b

23#stateofpayments

MARKETSIZE (Forecast)ECOMMERCE



12b

10b

8b

6b

4b

2b

0


2.83b

8.09b

2.30b

8.35b

7.30b

1.86b

.25b.52b

20202015

.68b

1.84b

.04b .09b.31b .49b

24 #stateofpayments

MARKETSIZE (Forecast)ENTERTAINMENT



800m

600m

400m

200m

0


129.3m

605.8m

36.7m

1.52m 4.09m

20202015

8.82m 0.58m1.26m12.4m 23.8m2.69m3.87m 4.15m6.90m

25#stateofpayments

ACCEPTANCE RATIOOVERVIEW

The average acceptance across the Middle East has increased dramatically in 2015. This growth was largely fuelled by Egypt, Jordan and Kuwait however all countries studied saw impressive improvements.

Egypt saw their largest improvements in the ecommerce sector which increased by 16% over last year. This is a very positive sign that the Egyptian population is becoming more comfortable using ecommerce services in their daily lives. Another notable area of growth is Kuwait’s marketplace services sector which increased by 11.1%. Overall, the increasing acceptance ratio means online payments are becoming more common and more accepted in the region.

100%

80%

60%

40%

20%

0

20152014


68%71%

54%58%

47%51% 50%

53%

46%49%

47%

52% 52%54%

26 #stateofpayments

20152014

100%

80%

60%

40%

20%

0


60%

65%

MARKETPLACE

70%

78%

60%63%

69%71%

80%80%

ACCEPTANCE RATIOUNITED ARAB EMIRATES



27#stateofpayments

ACCEPTANCE RATIOKINGDOM OF SAUDI ARABIA



20152014

100%

80%

60%

40%

20%

0


53%

58%

MARKETPLACE

70%

75%

50%52%

50%

55%

49%50%

28 #stateofpayments

ACCEPTANCE RATIOEGYPT



20152014

100%

80%

60%

40%

20%

0


52%55%

MARKETPLACE

43%45%

39% 40%

50%

58%

50%

55%

29#stateofpayments

ACCEPTANCE RATIOKUWAIT



20152014

100%

80%

60%

40%

20%

0


45%

50%

MARKETPLACE

52%55%55%

60%

43%45%

54%56%

30 #stateofpayments

ACCEPTANCE RATIOLEBANON



20152014

100%

80%

60%

40%

20%

0


50%

55%

MARKETPLACE

45%

50%52%

55%

39% 40%

45%45%

31#stateofpayments

ACCEPTANCE RATIOJORDAN



20152014

100%

80%

60%

40%

20%

0


50%

55%

MARKETPLACE

50%

55%55%

60%

37%

40%

45%

50%

32 #stateofpayments

ACCEPTANCE RATIOQATAR



20152014

100%

80%

60%

40%

20%

0


52%55%

MARKETPLACE

55%58%

50% 50% 50% 50%51%

55%

33#stateofpayments

ACCEPTANCE RATIOAIRLINES



100%

80%

60%

40%

20%

0

20152014


80%80%

49% 50% 50%

55% 54% 56%

45% 45% 45%

50% 51%

55%

34 #stateofpayments

ACCEPTANCE RATIOTRAVEL



100%

80%

60%

40%

20%

0

20152014


60%

50%52%

39%40%

55%

60%

52%55% 55%

60%

50% 50%

63%

35#stateofpayments

ACCEPTANCE RATIOECOMMERCE



100%

80%

60%

40%

20%

0

20152014


69%71%

50%

55%

50%

58%

43% 45%

39% 40%37%

40%

50% 50%

36 #stateofpayments

ACCEPTANCE RATIOENTERTAINMENT



100%

80%

60%

40%

20%

0

20152014


60%

65%

53%

58%

52%55%

45%

50% 50%

55%

50%

55%52%

55%

37#stateofpayments

ACCEPTANCE RATIOMARKETPLACE



100%

80%

60%

40%

20%

0

20152014


70%

78%

70%

75%

43%45%

52%55%

45%

50% 50%

55% 55%58%

38 #stateofpayments

REFUNDS OVERVIEW

Across the Middle East we observed a positive trend of reduced refund ratios with the biggest improvements occurring in Jordan (-31.7%), KSA (-25.5%) and UAE (-22.4%).

These improvements were largely seen across all sectors however some of the most exciting improvements were in ecommerce. Within the UAE, KSA, Egypt and Kuwait the average improvement was -21%. Ecommerce has notable variance in refund behaviour within the region; in Egypt and KSA the refund ratio is improving, indicating consumers are more certain about their purchases where as in Lebanon their purchases may be more impulsive.

20152014

4%

3%

2%

1%

0


2.62%

1.95%

4.10%

3.44%

2.26%

1.81%1.74%

1.80%

2.96%

2.02%

1.22% 1.19%

2.52%

1.96%

39#stateofpayments

REFUNDSUNITED ARAB EMIRATES



40 #stateofpayments20152014

5%

4%

3%

2%

1%

0


2.00%

1.14%

MARKETPLACE

.60%.54%

5.00%

4.00% 4.02%

3.11%

1.00%1.00%

REFUNDSKINGDOM OF SAUDI ARABIA



41#stateofpayments

5%

4%

3%

2%

1%

0

20152014


1.80%

1.50%

MARKETPLACE

.30% .30%

5.00%

3.46%

3.00%3.00%

2.00%

2.50%

REFUNDSEGYPT




12%

10%

8%

6%

4%

2%

0


2.00% 2.00%

MARKETPLACE

.50%

.20%

3.00%3.00%

12.00%

9.00%

3.00%3.00%

REFUNDSKUWAIT



5%

4%

3%

2%

1%

0


1.80%

1.50%

MARKETPLACE

.70%.50%

2.50%

2.00%

5.00%

4.00%

1.29%

1.05%

2015201443#stateofpayments

20152014

5%

4%

3%

2%

1%

0


1.00% 1.00%

MARKETPLACE

.22%.18%

1.50%

1.00%

4.00%

5.00%

2%1.80%

REFUNDSLEBANON



44 #stateofpayments

REFUNDSJORDAN




10%

8%

6%

4%

2%

0


1.00% 1.00%

MARKETPLACE

.30%.10%

9.00%

6.00%

1.50%

1.00%

3.00%

2.00%

REFUNDSQATAR




3%

2%

1%

0


1.00% 1.00%

MARKETPLACE

.12%

.10%

2.00%

2.47%

1.50%

1.40%

1.50%

1.00%

REFUNDSAIRLINES




3%

2%

1%

0


3.00%

2.00%

1.29%

1.05%

2.00%1.80%

1.50%

1.00%

1.50%1.40%

3.00%3.00%

1.00%1.00%

REFUNDSTRAVEL



20152014

5%

4%

3%

2%

1%

0


5.00%

3.46%

2.50%

2.00%

1.50%

1.00%

3.00%

2.00%

1.50%

1.00%

3.00%3.00%

5.00%

4.00%

48 #stateofpayments

REFUNDSECOMMERCE




12%

10%

8%

6%

4%

2%

0


4.02%

3.11% 3.00%

12.00%

9.00%

4.00%

5.00%

9.00%

6.00%

2.00%

2.47%2.50%

5.00%

4.00%

REFUNDSENTERTAINMENT



2%

1%

0

20152014


1.80%

1.50%

1.80%

1.50%

1.00%1.00% 1.00% 1.00% 1.00%1.00%

2.00%2.00%2.00%

1.14%

50 #stateofpayments

REFUNDSMARKETPLACE



20152014

1%

0.8%

0.6%

0.4%

0.2%

0


.30%

.70%

.50%

.22%

.18%

.30%

.10%.12%

.10%

.50%

.20%

.60%

.54%

.30%

51#stateofpayments

SEASONALITYAIRLINES TX NUMBERS

Throughout 2015 there has been positive growth at both country and industry levels. Shopper behaviour has shifted slightly with regards to seasonality with major purchases taking place at di�erent times in 2015.

Airlines saw an increase in both the number of transactions and overall volume and the distribution of transactions across the year shifted dramatically. In 2014 we saw selective months significantly outperforming others, while in 2015 we saw a healthier distribution.

New trends were also observed in the ecommerce sector with a spike in November shopping relating to the holiday season and promotions during those times.

4,475

16k

12k

8K

4K

0

-4k

-8k

-12k

-16k

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

-8,339 -8,479

739

-6,437

-1,227

-2,280-1,984

2,036

9,328

1,231

10,934

2015

52 #stateofpayments

SEASONALITYAIRLINES TX VOLUME




$12m

$9m

$6m

$3m

0m

$-3m

$-6m

$-9m

$-12m

-9.8m

0.68m

-3.4m

1.8m

5.3m

9.3m10.8m

5.3m

-4.8m

-5.9m

-0.47m

-8.7m

2015


53#stateofpayments

SEASONALITYTRAVEL TX NUMBERS




35k

30k

25K

20K

15k

10k

5k

0

-5k

-10k

-15K

-20K

-25k

-30k

-35k

17,777

-25,389

-21,267

-12,637 -11,256

-2,780

4,724 4,844

15,90513,952

8,683 7,446

2015


54 #stateofpayments

SEASONALITYTRAVEL TX VOLUME




$12m

$8m

$4m

0m

$-4m

$-8m

$-12m -12.1m

-9.7m

-5.5m

-6.7m

-2.9m

5.7m

10.8m

9.0m

5.5m

0.76m

-0.16m

5.3m

2015


55#stateofpayments

SEASONALITYECOMMERCE TX NUMBER




200k

160k

120K

80K

40k

0k

-40k

-80k

-120k

-160k

-200k

46,953

-69,854 -72,958

18,467

-35,760-27,008

1,815

-37,754 -39,470

21,805

180,913

2015


12,851

56 #stateofpayments

SEASONALITYECOMMERCE TX VOLUME




$40m

$30m

$20m

$10m

0m

$-10m

$-20m

$-30m

$-40m

-12m-13.6m

-8.1m

-3.5m

-6.6m-4.5m -4.4m

2.5m

39.7m

-1.4m

5.2m6.9m

2015


57#stateofpayments

SEASONALITYENTERTAINMENT TX NUMBER




10k

8k

6K

4K

2k

0k

-2k

-4k

-6k

-8k

-10k

5,407

-2,858

-570

1,464

-1,693

-4,533

-2,295

-6

1,028

2,386

6,893

-5,219

2015


58 #stateofpayments

SEASONALITYENTERTAINMENT TX VOLUME




$4m

$3m

$2m

$1m

0m

$-1m

$-2m

$-3m

$-4m

-0.59m -0.47m

0.07m0.14m 0.08m

-0.83m

0.08m0.30m

-0.30m -0.26m

2m

-0.27m

2015


59#stateofpayments

SEASONALITYMARKETPLACE TX NUMBER




-8,529

-9,902

-6,201

-4,120

-1,317

-325378

3,8504,369

7,683 7,750

10k

8k

6K

4K

2k

0k

-2k

-4k

-6k

-8k

-10k

6,364

2015


60 #stateofpayments

SEASONALITYMARKETPLACE TX VOLUME




$1m

$.80m

$.60m

$.40m

$.20m

0

$-.20m

$-.40m

$-.60m

$-.80m

$-1m-1m

-0.82m

-0.70m

-0.40m

-0.03m

0.54m 0.55m

0.81m

1m

-0.11m

0.74m

-0.54m

2015


61#stateofpayments

Understand the population that is Driving Innovation

100m

80m

60m

40m

20m

0

POPULATION

A large portion of the Arab World is concentrated within the population centers of Saudi Arabia and Egypt. Though these two markets represent some of the greatest opportunity for ecommerce in the region, both present unique challenges for businesses.

Within Saudi Arabia the mobile web is becoming the go to platform for day to day browsing and ecommerce alike, but with roughly 1 in 2 Saudi’s still concerned over online payment security, businesses need to better communicate their security features if they want to succeed.

In Egypt desktop browsing remains king with roughly 3 out of 4 shoppers using the platform to complete their online shopping. Credit card access continues to be a barrier for online shopping in the country and 40% shoppers claim it prevents them from exploring online shopping.

Overall populations in the Arab World are continuing grow increasing by 2.1% over 2014.

KSA QATAR

30.8

m31

.5m

JORDAN

6.6m 6.7m

2.1m 2.2m

2014 2015

UAE

9.0m 9.1m

EGYPT

89.5

m90

.6m

KUWAIT3.

7m 3.9m

LEBANON

4.5m 4.6m

63#stateofpayments

40m

30m

20m

10m

0m

8.5m

8.2m

20.8

m19

.6m

31.4

m28

.3m

3.1m

2.9m 3.

6m3.

3m

3.2m

2.9m

2.0m

1.9m

INTERNET USER

Internet users continue to grow at a rapid pace, increasing by roughly 13.1% over the previous year.

Egypt continues to be the largest internet market in the region followed by Saudi Arabia and Morocco. Though these countries represent over ¾ of the regions internet users, internet penetration remains relatively low; ranging between 35% for Egypt and 65% for Saudi Arabia.

In contrast countries like the UAE, Qatar, and Kuwait have seen further internet penetration and now represent some of the region’s most mature internet populations. As more users move online expect to see more pressure to develop the Arab World’s ecommerce industry.

2014 2015


64 #stateofpayments

20m

15m

10m

5m

0m


ONLINE BUYERS

In line with the growth of the region’s online population the number of online buyers has increased by nearly 14% over 2014 values. This increase is a positive sign that ecommerce is continuing to gain traction across the Arab World.

Egypt continues to represent the region’s largest online population with an 18 Million customers taking advantage of online shopping opportunities. Despite this large number of online shoppers, when looked at in terms of proportion of population Egypt remains behind all other countries studied.

Leading the region, the UAE has the highest number of online buyers as a proportion of the population with just over 70%. Interesting, when looking at the number of online buyers as a portion of the internet users in a country, it is Kuwait that comes out a head with 82% of its online population shopping online.

7.0m

6.8m

12.0

m10

.6m

17.7

m15

.2m

2.6m

2.4m

2.1m

1.6m

1.3m

1.6m

1.2m

.94m

2014 2015

65#stateofpayments

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0

82.1%

41.3

% 46.1%

49.1%

36.9

%

55.2

%

TWIT

TER

FAC

EBO

OK

GO

OG

LE+

LIN

KED

IN

INST

AGRA

M

PIN

TERE

ST

WO

RDPR

ESS

FLIC

KR

YOU

TUBE

I DO

NO

T U

SE S

OC

IAL

MED

IA

15.2

%

5.8%

4.4%6.

1%

SOCIAL NETWORKSUNITED ARAB EMIRATES

Just like other areas of the world, the Middle East has embraced social media. It is estimated that between 85% and 90% of the region’s online population use social media daily representing a potential audience of nearly 100 million people. With such a massive number of potential customers browsing daily it’s no wonder businesses are scrambling to improve their social presence.

The popularity of social networks varies across the region. Facebook remains the Middle East’s most popular network however its presence is notability weaker in the KSA and Kuwait. A fairly new entrant to the social media landscape, Pinterest is gaining popularity across the region led by a 21% usage rate in Qatar.

66 #stateofpayments

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0

64.5

%

54.6

%

44.7

%

24.8

%

52.2

%

52.4

%

TWIT

TER

FAC

EBO

OK

GO

OG

LE+

LIN

KED

IN

INST

AGRA

M

PIN

TERE

ST

WO

RDPR

ESS

FLIC

KR

YOU

TUBE

6.6%

3.2% 5.1%5.2%

SOCIAL NETWORKSKINGDOM OF SAUDI ARABIA



I DO

NO

T U

SE S

OC

IAL

MED

IA

67#stateofpayments

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0

93.4

%

60.5

%

70.4

%

32.1% 35

.8%

6.7%

66.4

%

TWIT

TER

FAC

EBO

OK

GO

OG

LE+

LIN

KED

IN

INST

AGRA

M

PIN

TERE

ST

WO

RDPR

ESS

FLIC

KR

YOU

TUBE

9.4%

5.2%

1.4%

SOCIAL NETWORKSEGYPT



I DO

NO

T U

SE S

OC

IAL

MED

IA

68 #stateofpayments

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0

76.5

%

49.0

%

51.4

%

38.0

%

51.8

%

61.2

%

TWIT

TER

FAC

EBO

OK

GO

OG

LE+

LIN

KED

IN

INST

AGRA

M

PIN

TERE

ST

WO

RDPR

ESS

FLIC

KR

YOU

TUBE

11.0

%

5.1%

3.5%7.

5%

SOCIAL NETWORKSKUWAIT



I DO

NO

T U

SE S

OC

IAL

MED

IA

69#stateofpayments

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0

93.4

%

53.0

%

43.0

% 50.3

%

49.7

%

47.7

%

FAC

EBO

OK

GO

OG

LE+

LIN

KED

IN

INST

AGRA

M

PIN

TERE

ST

WO

RDPR

ESS

FLIC

KR

YOU

TUBE

14.6

%

4.6%

2.0%

2.6%

SOCIAL NETWORKSLEBANON



I DO

NO

T U

SE S

OC

IAL

MED

IA

TWIT

TER

70 #stateofpayments

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0

88.5

%

46.0

% 54.0

%

44.1%

37.5

%

51.0

%

TWIT

TER

FAC

EBO

OK

GO

OG

LE+

LIN

KED

IN

INST

AGRA

M

PIN

TERE

ST

WO

RDPR

ESS

FLIC

KR

YOU

TUBE

10.3

%

3.4% 5.

1%

4.9%

SOCIAL NETWORKSJORDAN



I DO

NO

T U

SE S

OC

IAL

MED

IA

71#stateofpayments

84.8

%

47.7

% 55.0

%

49.7

%

52.3

% 60.9

%

TWIT

TER

FAC

EBO

OK

GO

OG

LE+

LIN

KED

IN

INST

AGRA

M

PIN

TERE

ST

WO

RDPR

ESS

FLIC

KR

YOU

TUBE

21.2

%

6.0%

4.0%6.6%

SOCIAL NETWORKSQATAR



I DO

NO

T U

SE S

OC

IAL

MED

IA

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0

72 #stateofpayments

60%40%

66%34%

62%38%

78%22%

73%27%

72%28%

66%34%


BUYERS BY GENDERS

Male shoppers continue to buy more online than women. This trend is most pronounced in Egypt where men account for nearly 80% of all online transactions. The UAE shows more female inclusion in the online economy with females accounting for 40% of all online transactions.

With the online economy becoming a critical aspect of day to day life, it should be a focus of Arab governments to help extend these technologies to the entire population.

73#stateofpayments

AGE GROUPUNITED ARAB EMIRATES

30-34 year olds now represent the largest ecommerce market in the Arab World. Brands looking to succeed in Middle Eastern markets will have to ensure that large portion of their marketing e�orts appeal to them.

Firms in Saudi Arabia, Egypt, and Lebanon should also look to target the younger 18-25 bracket as this age group accounts for a substantial portion of the online shopping population.

One notable outlier found in our demographics research is Qatar’s older, 40+ age group appears to be very active in the ecommerce space. Companies that look to target this demographic may want to explore Qatar for further ecommerce expansion.

18-25 26-35 36-40 41-50 51+

23%17%

23%

13%

24%

50%

40%

30%

20%

10%

0

74 #stateofpayments

AGE GROUPKINGDOM OF SAUDI ARABIA




18-25 26-35 36-40 41-50 51+

26%

14%

21%

17%

22%

50%

40%

30%

20%

10%

0

75#stateofpayments

AGE GROUPEGYPT




18-25 26-35 36-40 41-50 51+

23%

14%

18%

25%

20%

50%

40%

30%

20%

10%

0

76 #stateofpayments

AGE GROUPKUWAIT




18-25 26-35 36-40 41-50 51+

33%

15%

19%

9%

24%

50%

40%

30%

20%

10%

0

77#stateofpayments

AGE GROUPLEBANON




18-25 26-35 36-40 41-50 51+

25%

15%18%17%

25%

50%

40%

30%

20%

10%

0

78 #stateofpayments

AGE GROUPJORDAN




18-25 26-35 36-40 41-50 51+

19% 18%

27%

17%19%

50%

40%

30%

20%

10%

0

79#stateofpayments

AGE GROUPQATAR




18-25 26-35 36-40 41-50 51+

23%19%19%

11%

28%

50%

40%

30%

20%

10%

0

80 #stateofpayments

4%

8%

14%

22%

32%

19%

Less than $266 $266 - 532 $533 - 1065 $1066 - 2665 $2666+ Prefer no to say/Don’t know

INCOME LEVELUNITED ARAB EMIRATES

The spread of income distribution remains fairly consistent across Qatar, Kuwait, the UAE, Saudi Arabia and Lebanon. These countries all see a large proportion of their population fall within the higher income brackets. Qatar tops our list with 67% of respondents identifying in the top two income brackets.

Egypt and Jordan on the other hand have a larger proportion of consumers that fall into the lower end of the income spectrum. For Egypt 68% of respondents identified in the sub $1,065 per month brackets; in Jordan this number was 56%.

For businesses looking to break into the various countries across the region it will be important to understand the income landscape and provide products tailored the countries average income level.

50%

40%

30%

20%

10%

0

81#stateofpayments

10%

14% 15%

22%

17%

22%


INCOME LEVELKINGDOM OF SAUDI ARABIA




50%

40%

30%

20%

10%

0

82 #stateofpayments

22%

26%

20%

10%

5%

17%


INCOME LEVELEGYPT




50%

40%

30%

20%

10%

0

83#stateofpayments

5% 5%

14%

30%29%

17%


INCOME LEVELKUWAIT




50%

40%

30%

20%

10%

0

84 #stateofpayments

5%

8%

14%

30%32%

11%


INCOME LEVELLEBANON




50%

40%

30%

20%

10%

0

85#stateofpayments

5%

19%

32%

28%

7%9%


INCOME LEVELJORDAN




50%

40%

30%

20%

10%

0

86 #stateofpayments

3%

13%

5%

25%

42%

12%


INCOME LEVELQATAR




50%

40%

30%

20%

10%

0

87#stateofpayments

Inside the mind of today’s Arab shoppers

SHOP OFFLINE

RESEARCH ONLINE, SHOP ONLINE

RESEARCH OFFLINE, SHOP OFFLINE

RESEARCH ONLINE, SHOP ONLINE OR OFFLINE DEPENDING ON PRICE

RESEARCH ONLINE

SHOP ONLINE RESEARCH OFFLINE

17%

21%

2%

31%

29%

UAE LEADS ONLINE SHOPPIN

G B

Y

The role the internet plays in consumer shopping remains varied. 17% of shoppers say they complete their entire shopping journey online and 67% are doing their research online. For many users the cost of an item is a major consideration when choosing between purchasing online or o�ine, 29% of shoppers say price is the deciding factor. This is particularly true for the UAE where 39% of shoppers say the price of a product a�ects whether they buy online.

Across the Middle East online shopping continues to grow with 61% of the population shopping online. The UAE is leading the region with 71% of the country shopping online; both Jordan and Morocco remain behind with 50% of the population remaining o�ine.

SHOPPING BEHAVIOURIN THE REGION

ONLINE SHOPPINGIN THE ARAB WORLD

CONSUMER SURVEY INFOGRAPHICUnderstanding the unique demographics and habits of consumers across the Middle East is a powerful tool for businesses within the region. This year we’ve collected a range of information you can use to better adapt to the Middle East’s unique consumer base. With data covering the o�ine to online transition, preferred payment options, as well as security and privacy concerns, this infographic provides everything you need to better understand the Middle Eastern ecommerce market.

Online shoppers in the region are slowly increasing their purchase frequency with 53% of the population making at least one purchase per month. Though still lagging behind more developed online marketplaces, this is a positive sign that confidence in Arab ecommerce is continuing to grow.

KUWAITISHOP VIAMOBILE

56%

EGYPTIANSSHOP VIA

MOBILE

42%

67%DESKTOP

24%TABLETS

49%MOBILE

ONLINE SHOPPINGFREQUENCY

7%9%

16%

21%

14%

34%

TWICE AMONTH

ONCE AMONTH

TWICE AWEEK

ONCE PERWEEK

ONCE IN2 MONTHS

ONCE IN 3 - 6 MONTHS

53%PURCHASE AT LEASTONCE PER MONTH

DEVICE OF CHOICE FORONLINE SHOPPERSThe introduction of tablets and smartphones has opened a range of innovative shopping experiences around the world and the Arab market is no exception.

Mobile devices are quickly becoming a staple of ecommerce with nearly 50% of customers using their phones to complete their online shopping.

In countries with high smartphone penetration such as Kuwait, mobile based shopping has been adopted by 56% of the population. In contrast Egypt currently only has 42% of its population shopping via mobile devices.

ONLINE SHOPPING ISCOMFORTABLE

8%

FITS MY BUSYLIFESTYLE

4%

EASY RETURNS

4%

OTHERS

2%

PRODUCTVARIETY

27%

UNIQUE STUFF

23%

BETTER PRICES

33%

WHY DO YOUSHOP ONLINE?Online shopping can o�er many advantages over traditional brick and mortar stores. For the Arab world, the wide variety of products is a major driver for shopping online.

Other important factors include the ability to find ‘niche’ products and overall better deals. Surprisingly ‘convenience’ does not appear to be a consideration for Arab shoppers.

89#stateofpayments

Arab shoppers are buying a range of products and services online. Mobile phones proved to be the most popular products with 45% of shoppers claiming to have bought their device online. Flight tickets also remain a common product with clothing, bill payments and watch purchases rounding out the top 5.

WHAT TYPE OF PRODUCTS AREARAB SHOPPERS BUYING

38%UTILITIES BILLS

40%CLOTHES

44%FLIGHT TICKETS

45%MOBILE PHONES

33%WATCHES

24%BAGS

26%LAPTOPS

26%SHOES

29%HOME APPLIANCES

31%PERFUMES

3%OTHERS

13%HOME FURNISHINGS

15%COLLECTIBLES

19%CAMERAS

21%BOOKS

23%TABLETS, PCS

12%TVS

12%VIRTUAL GOODS

8%HOME

DXB - HYD

3:26

TOP FIVE PRODUCTSBY COUNTRY

MOBILEPHONESEGYPT

UTILITIESBILLS

LAPTOPS TABLETS CLOTHES

61% 38% 37% 35% 34%

UAEFLIGHTTICKETS

CLOTHES MOBILEPHONES

UTILITIESBILL

WATCHES

55% 43% 42% 36% 35%

KSA CLOTHES FLIGHTTICKETS

WATCHES MOBILEPHONES

UTILITIESBILL

41% 40% 38% 38% 38%

KUWAITFLIGHTTICKETS

UTILITIESBILLS

PERFUMES CLOTHES MOBILEPHONES

55% 48% 39% 36% 35%

WHAT SITES ARE POPULARIN THE ARAB WORLD

90#stateofpayments

Souq.com has found the most success in the region with nearly 75% of shoppers going to the site for their shopping needs. Despite minimal support in the region Amazon is the number two site, likely a result of their vast inventory and range of niche products.

40%74% 20%

6%8%

4O% 21%

14% 12%

OTHERS

With better prices bringing more Arab shoppers into the online realm, it’s no surprise that when it comes to completing the transaction price has the biggest influence. Fifty five percent of shoppers say that the ‘best deal’ impacts their final decision.

Past experience with the website as well as product reviews and recommendations from friends also a�ect a shopper’s decision to buy.

While ads and email marketing have some impact, price and third party reviews are what influence shoppers.

WHAT INFLUENCESARAB SHOPPERS

BESTDEALS

PRODUCTREVIEW

FRIENDSRECOMMENDATION

HOW SHOPPERS ARE INFLUENCED

55% 39% 31%

13%

13%

17%

1%

ADVERTISMENTS

TV ADS

GOOGLE ADS

FACEBOOK ADS

OTHER CHANNELS

EMAIL SUBSCRIPTION 14%

PAST EXPERIENCE WITH THE SAME WEBSITE 41%

For many shoppers, the o�ine experience keeps them from exploring online shopping options. The ability to touch and interact with the product before buying remains an important aspect of the shopping experience for many shoppers.

Though it’s di�cult to replicate product interactions in the online space, providing better return policies and more on site discounts can easily be translated to an ecommerce platform.

PREFER TO TOUCHTHE PRODUCT

BETTER RETURNPOLICIES

55% 36%

OTHERSNO SHIPPINGFRUSTRATION

30% 2%

IN-STOREDISCOUNTS

29%

NO PRODUCTDISAPPOINTMENT

45%

INSTANTGRATIFICATION

32%

QUALITY TIMEWITH FAMILY & FRIENDS

27%

Reviews play an important role in the online shopping experience globally and this trend is also apparent in the Arab world. With 9 out of 10 people checking reviews before making an online purchase, they have the potential to make or break a sale.

While over 90% of individuals rely on reviews to aid in their decisions, only 60% regularly give feedback after a purchase. This leaves 60% of consumers informing 90% of future shoppers.

REVIEWS MATTER TO ONLINE SHOPPERS

9/10PEOPLE CHECK

REVIEWSBEFORE ONLINEPURCHASE

LEARNING FROMOFFLINE SHOPPING

BEHAVIOUR

91#stateofpayments

PAYMENT, SECURITY & PRIVACY

Cash on Delivery continues to be the most popular payment option in the region with 50% of shopper preferring this method of payment. This preference is most prevalent in Egypt where 70% of the shopping population prefers Cash on Delivery.

The more ecommerce friendly credit card method is beginning to close the gap, with the UAE seeing 1/3 of shoppers selecting credit card as their preferred payment method. With credit card penetration growing year on year cash on delivery will begin to fade.

Cash still dominates o�ine shopping however with 80% of o�ine shoppers preferring to pay with cash at brick and mortar locations. This trend is most prominenet in Egypt where 91% of o�ine transactions are settled with cash.

HOW DO ARAB SHOPPERSWANT TO PAY

WHAT INFLUENCES ARAB SHOPPERS

CASH ON DELIVERY

CREDIT CARD

PREPAID CASH CARDS

DEBIT CARD

NET BANKING

CREDIT CARD INSTALMENTS PLAN

OTHER

51%

26%

8%

6%

5%

3%

1%

PROCEED TO CHECKOUT

91% OF EGYPT SHOPPERSSELECT CASH

33% OF UAE SHOPPERSSELECT CREDIT CARD

Privacy and security remain major concerns for shoppers across the region. While there have been dramatic improvements over the last five years, confidence in online shopping is still lower than in more mature markets.

SECURITY & PRIVACY

HOW CONFIDENT ARE YOU THAT YOUR PERSONALINFORMATION IS KEPT CONFIDENTIAL

36%

24%

22%

11%

7%

QUITE CONFIDENT

MODERATELY CONFIDENT

EXTREMELY CONFIDENT

SLIGHTLY CONFIDENT

NOT AT ALL CONFIDENT

HOW CONFIDENT ARE YOU THAT YOUR PAYMENTINFORMATION IS SECURE

35%

23%

22%

12%

9%

QUITE CONFIDENT

MODERATELY CONFIDENT

EXTREMELY CONFIDENT

SLIGHTLY CONFIDENT

NOT AT ALL CONFIDENT

HOW OFTEN DO PRIVACY CONCERNSPREVENT A PURCHASE

29%

29%

16%

14%

12%

MOST OF THE TIME

ABOUT HALF THE TIME

ONCE IN A WHILE

ALWAYS

NEVER

Those shoppers that remain o�ine cite not having a credit card and a lack of trust in the payment systems as their main reasons for not embracing online shopping.

In Egypt for example low credit card penetration continues to disrupt ecommerce with 39% of the population remaining o�ine due to a lack of credit card. The Kuwaiti population exemplifies online payment trust issues with 56% of shopper claiming they do not trust online payments.

For businesses, communicating security features and educating consumers remains critical to the success of ecommerce in the region. At the same time banks need to find solutions that enable more consumers to participate in the digital marketplace.

As these two critical issues are addressed a greater shift to ecommerce will be seen across the region.

HOW TO BRING THE REMAININGARAB SHOPPER ONLINE

WHAT DO YOU THINK ABOUT THE 3D SECURE SYSTEM?

3D Secure is an internationally recognised security standard for online credit card payments which has recently made its way to the region; It adds an additional security layer for online credit and debit card transactions and aims to prevent online fraud.

Though still new to the region the security feature is resonating well with the population. It is proving most popular in the UAE, KSA and Kuwait where well over 50% of shopper say it makes them feel more secure. Egypt is still catching up however with only 43% of the population feeling more secure and 36% concerned about entering banking details on a 3rd party site.

HOW DOES 3D SECURE IMPACTSHOPPER CONFIDENCE?

I LIKE BECAUSEMORE SECURE

HATE FORGETTABLEMORE PASSWORDS

52% 29% 19%

50%

UAE, KSA & KUWAITSHOPPERS FEEL SECURE

USING 3D SECURE

LOCAL ONLINESERVICES ARE

NOT GOOD

11%

OTHERS

10%

DON’T TRUSTONLINE PAYMENTS

44%

DON’T HAVECREDIT CARDS

35%WHY DON’T YOU SHOP ONLINE

DONT TRUST 3RD PARTY SERVICES

92#stateofpayments

Overcoming E-Commerce Challenges in the Middle East

FAILURE FROM 3D SECURE

In the ongoing fight to prevent fraud, credit card companies and banks are working with online retailers to implement 3D secure technologies – namely Verified by Visa and MasterCard Secure Code. 3D Secure o�ers an extra layer of protection for both cardholders and merchants. It works by requiring customers to enter an additional password after checkout completion to “verify” that they are the cardholder.

CHALLENGEEven with the extra security benefits, 3D Secure has seen mixed responses from retailers. Adding an additional step to what is for many already a complicated process means online businesses are being forced to make a tough decision; adopt 3D secure technology and risk abandoned sales or avoid the technology and take responsibility for fraudulent transactions.

So how can you determine if it’s right for your business and how can you minimize the impact 3D Secure has on your conversion rate?

94 #stateofpayments

If you are startups or any business that don't have resources, you could go for 3D Secure option, you could tie up with 3rd party who helps you monitor transaction that's one of the possible solution, if you are a big merchant you can definitely hire your own team, integrate with a PSP who helps you monitor you transaction, you can connect with specialized 3rd party solution provides you a tool to help you in your risk management to save your conversion rate and don't forget 3D secure is not your only protection against fraud.

MAARID FAZILI - Risk Manager / PAYFORT

http://stateofpayments.com/sop16_vp/maarid_video.htmlhttp://stateofpayments.com/sop16_vp/maarid_video.html

FAILURE FROM 3D SECURE

POSSIBLE SOLUTIONSIt’s important to remember that your business’s particular situation will vary according to a unique mix of industry, markets, preferred card types, customer payment preferences, mobile/desktop experience, and many more.

To remain competitive while implementing 3D secure technology we encourage merchants to consider a dynamic approach, which includes the following points:

Take the time to customize your strategy: The first and most important step to e�ectively implementing 3D secure is to customize which transaction types should be routed through the technology. Take some time to think about what transactions pose the highest risk for your business and consider implementing 3D Secure as an extra security layer just for those specific purchases.

Make sure you educate your shoppers: As we discussed above, one of the main reasons 3D Secure has a high rate of abandonment is that shoppers are unaware of the process and become concerned it is a security threat. Merchants who work to proactively educate their shoppers about 3D secure and the security benefits it brings are far less likely to experience the drop o�.

Regularly re-evaluate: As your businesses continues to grow and expand to new markets, you’ll likely need to accept di�erent card types, and roll out new products, what works today may not necessarily be valid tomorrow. This is also true for attempted fraud, as fraudsters constantly change tactics in an attempt to beat the system.

PAYFORT INSIGHTSUnfortunately 3D secure has proven to be an obstacle for many merchants across the region. But as di�cult as it has been, it is important to recognize the importance security plays in the online marketplace and how neglecting these technologies can lead to larger trust issues in the region. Overall businesses should be prepared to help consumers adapt and work with them to integrate better security options.

95#stateofpayments

CREDIT CARD PENETRATION

Credit card penetration across the MENA region varies wildly between countries. Some countries such as Kuwait have nearly ubiquitous adoption with 97% of the population claiming to have access to a credit card while others, such as Egypt, see credit card penetration levels in the single digits. Other countries across the region see varying levels of adoption; the UAE has card penetration of 89%, KSA and Qatar ~45%, while Lebanon falls towards the lower end with 15%. CHALLENGEWith all that said, on average the MENA region remains behind many areas of the world of the in terms of credit card usage.

As a large percentage of adults across the Middle East still do not utilize a bank account, online retailers in the region are often forced to accept cash payments for online transactions.

This brings a range of challenges for merchants such as:Unexpected Returns – These comes as a loss for merchants when customers change their mind between the time of purchase and the time of delivery.

Fear of Theft – The agents responsible for delivery a required to handle large amounts of cash making them targets for potential thefts.

Slow Payments – COD payments take substantially more time to reach a company’s bank account, particularly if you are using third party services for collection.

Though for many businesses, credit card penetration isn’t something that they can address directly, there are opportunities for improving the landscape.

96 #stateofpayments

For us we saw opportunity in the restrictions to allow people to pay the way they want to pay and just cater to local, Arabian or emerging market mentality.

FOUAD JERYES - Co-Founder / CASH Basha

One of challenges is to convert the localpayments methods such as: Fawry in Egypt, Sadad in Saudi Arabia, KNet in Kuwait and others in all the Arab world to the online world.

AHMED ORABY - Ecommerce Manager / Nile Air

http://stateofpayments.com/sop16_vp/fouad_video.htmlhttp://stateofpayments.com/sop16_vp/fouad_video.html

http://stateofpayments.com/sop16_vp/ahmed_video.htmlhttp://stateofpayments.com/sop16_vp/ahmed_video.html

CREDIT CARD PENETRATION

SOLUTIONFor businesses, working with banks to encourage a wider range of credit card solutions is a strong first step. It is important that businesses communicate demand and o�er their insight into was modern consumer need to access the online market place. Finally, educating consumers on credit card payments and lobbying payment gateways to innovate on their behalf should be a top priority of all ecommerce businesses.

In the meantime ecommerce businesses need to work hard to understand what solutions which are preferred locally. Credit cards may not be popular but e-commerce businesses are already making significant headway in introducing alternative payment solutions to the region.

PAYFORT INSIGHTThe Middle East is still finding its comfort level for digital forms of payment. With a large portion of the population still without bank accounts it is likely that a portion of the population will remain inaccessible for some time. At the same time, it is interesting to see that while some resist digital, another portion of the Arab World is very eager to embrace it.

As result businesses will need a diverse range of payment products if they want to tap the full potential of the Arab market. As merchants grow they should constantly be identifying gaps in their payment services and working with gateways to find the best solutions for customers and online businesses alike.

97#stateofpayments

FRAUD AND RISK TOLERANCE

As consumers continue to demand simpler solutions and push towards ‘ease of use’, security is becoming a more di�cult challenge for big and small businesses alike. Today’s consumers are placing more value on speed and convenience, leading to a ‘convenience culture’ that is driving the cashless revolution. Whether it’s using contactless cards to pay for a co�ee, or a one-click purchase on Amazon, quick and easy is winning the war over secure.

CHALLENGEUnfortunately, as the new convenient technologies become widely accepted, risks to both businesses and consumers grow in parallel. In the case of ecommerce and online payments, the risks have materialized primarily in the form of identity theft and fraud.Fighting fraud and safeguarding transactions remains a minefield, with each payment type bringing its own risks. Whether the transaction is made using the well-established credit card or more novel technologies like the virtual wallet, security remains a constant concern.

What can you do to safe guard your business and how can you minimize daily risks of accepting online payments?

1000100001

98 #stateofpayments

ATISH THAPA - Business Head OTA / Musafir

If I really had to choose to pick a problem so Fraud and Risk would be the biggest challenge that I see right now in regards of online payments specially where 3D secure system is not in place but I could see lot of banks now opting for OTP which is one-time password generation.

MOHAMMAD AL-ANSARI - VP / Flyin

The most challenge in my opinion the acceptance ratio where the issuers sometimes reject the cards without a clear reason and all that a�ect the acceptance ratio. If you have a potential with a good revenue weekly so I could say that 65% of it roughly might be rejected sometimes for no clear reasons or sometimes less awareness from clients...

http://stateofpayments.com/sop16_vp/atish_video.htmlhttp://stateofpayments.com/sop16_vp/atish_video.html

http://stateofpayments.com/sop16_vp/mohammed_video.htmlhttp://stateofpayments.com/sop16_vp/mohammed_video.html

FRAUD AND RISK TOLERANCE

POSSIBLE SOLUTIONThe steps you need to take to safeguard your business will depend on a range of factors including the products you provide, frequency of transactions, and whether you deal in the B2B or B2C space.

While you will need to constantly monitor and re-evaluate your risk management procedures to stay safe; implementing the below strategies will give you a strong foundation to build o� of.

Educate and train your sta� on e-commerce risk: As we mentioned above, the amount of risk your business faces will depend largely on internal practices as well as the fraud detection and prevention tools you use. It is important that everyone in your organization understands that online transactions can pose a risk to your business and that they are trained to follow established risk management procedures.

Focus on risk reduction: A well designed sales order process is an essential tool to help you address a wide range of risk concerns. Make sure you clearly label all required fields in your online payment acceptance form and verify all cardholder information that you receive from your customers over the internet.

Develop internal fraud prevention structure: For many businesses in ecommerce, the success and profitability of your organization depends on your internal fraud management strategies. Developing a strong risk management structure, that incorporates transaction controls and fraud prevention tools, will greatly reduce fraud-related losses.

Ensure PCI compliance: The Payment Card Industry (PCI) Data Security Standards (DSS) provide standard procedures and tools to help ecommerce businesses protect sensitive account information. To comply, you will need reliable encryption capabilities for data transmission and if you are storing cardholder information, e�ective internal controls. Be sure to check the DSS regularly and review your own security measures frequently.

PAYFORT INSIGHTThe move towards more streamlined shopping experiences has put a lot of pressure on merchants. Today’s consumer expects a faster and easier checkout while simultaneously enjoying more security. With such a focus on speed and convenience, it is di�cult for merchants to meet the needs of shoppers without making some compromises.

Businesses that can a�ord the investment to develop secure databases will likely stand to benefit from features like ‘One Click Checkout’ and detailed user profiles. Those that can’t must be careful not to sacrifice security in the interest of convenience. Establishing trust toward ecommerce and digital should be a priority for all merchants in the region.

1000100001

99#stateofpayments

MOBILE PAYMENT

Over the past 5 years, the proliferation of mobile devices, particularly smartphones and tablets, has transformed the way people interact with the internet. Through streamlined mobile websites and dedicated applications, consumers have more control than ever over how they shop. Now this rapidly growing technology is poised to dramatically change the payment ecosystem, bringing new players such as mobile operators and handset manufacturers into the mix.

CHALLENGE

While mobile payments bring a lot of exciting opportunity for consumers, this fledging payment method is causing mixed responses amongst businesses. Di�cult challenges such as perceived security threats, cross platform support, and slow user adoption make it di�cult to justify the investment.

Unfortunately failure to adopt is not an option and ignoring new payment methods can quickly put companies at a competitive disadvantage. As we’ve seen with many modern technologies, the landscape often shifts rapidly and with little warning. To stay ahead businesses need to be prepared for quick changes and remain aware of how mobile payment technology is evolving.

100 #stateofpayments

ANKIT SHUKLA - Relationship Manager / PAYFORT

ATISH THAPA - Business Head OTA / Musafir

Mobile penetration has grown up in the middle east thanks to the compatibility & users of the smart phones as well as the credit card penetration which is really high and that’s for simple reasons: Confidence Increased, More Responsive & a lot of choices given to customers.

In my opinion and based on my experience with Merchants that Mobile payments are the biggest advantage plus the biggest challenge in the ecommerce industry and there are 3 main challenges for mobile payments which are: Security, Awareness and cross border payments.

http://stateofpayments.com/sop16_vp/atish_video.htmlhttp://stateofpayments.com/sop16_vp/atish_video.html

http://stateofpayments.com/sop16_vp/ankit_video.htmlhttp://stateofpayments.com/sop16_vp/ankit_video.html

MOBILE PAYMENT

POSSIBLE SOLUTIONMobility for customers will continue to inspire innovation and create new experiences. To stay relevant, your business will need to remain flexible and be prepared to support a range of mobile payment models as they enter the market. Though there is no clear cut solution on how to transition to the world of mobile payments, there are a few things your business can do to be more prepared.

• Stay on top of disruptive changes to payment behaviour that might disturb your existing revenue streams.

• Be prepared to run traditional and mobile payments options in parallel while the technology develops.

• Keep up-to-date on emerging standards for issuing credentials, making payments, and accepting payments as well as the business risks they create.

• Build relationships with new players, including mobile device suppliers, peer-to-peer payment services, wallet providers, loyalty applications, consumer credit scoring agencies, and others.

PAYFORT INSIGHTRemaining dynamic will be the key to navigating the transition to mobile payments both regionally and globally. The technology is improving at a rapid pace and it is a question of when, not if, mobile payments will takeover in the Middle East.

In the region, it’s important for Middle Eastern businesses to consider the varied levels of smartphone penetration and how it may guide their transition. For example, Saudi Arabia leads the region with 79% of their population using smartphones; this is followed by the UAE with 72%, Kuwait with 69%, Lebanon with 63%, and finally Egypt with only 6%. Companies will need to carefully consider where their core revenue will be generated and make sure they closely monitor smartphone behaviour in their region.

Businesses that work to understand the landscape and innovate alongside the new technologies will gain the most. This means understanding the benefits of mobile payments and using them to create better user experiences. Dedicating a team or even an individual to understanding the mobile payments will prove invaluable in the coming years.

101#stateofpayments

TRUST

When it comes to making any purchase there are many obstacles that can interfere with the sale. One of the biggest di�culties many Middle Eastern businesses face still relate to 'Trust'. At the end of the day if consumers don't trust you, you're never going to sell anything, regardless of how good your product is. Making sure your customers have faith in your organization is paramount if you are going to be successful. Trust is not only important when attracting new customers, but also for building a network of loyal repeat-buyers.

CHALLENGEOnline shopping brings the trust issue to a whole new level. The delay between consumer payment and actually receiving the product, the risk of falsified images and descriptions, or even the potential of an outright scam, leave many consumers wary of the online marketplace.

What makes trust such a large issue is that there is no simple way to address it; no magic bullet that will simultaneously make all retailers honest and all consumers comfortable. In many cases it simply takes time and a degree of consumer training to help them feel truly secure while shopping online. With all that said there are a few di�erent techniques that businesses can use to make the overall process better for consumers and help push user through that learning curve of online shopping.


Including that Egypt still has defied gain confidence for payment through credit cards,I think that the diversification of payment methods from basic solutions that will help develop confidence among shoppers.

HUSSEIN ALSAKKAF - CEO / GoEjaza

REMO GIOVANNI - Managing Director / Travelstart

One of the biggest challenge for us is to get the trust from our customers which means to let them feel safe and secure when they shop on our website and the way how we worked on this was to o�er Alternative payments options that helped us to get the customer confidence to pay online.

http://stateofpayments.com/sop16_vp/hussein_video.htmlhttp://stateofpayments.com/sop16_vp/hussein_video.html

http://stateofpayments.com/sop16_vp/remo_video.htmlhttp://stateofpayments.com/sop16_vp/remo_video.html

TRUST

POSSIBLE SOLUTIONAchieving trust online is always more di�cult than gaining trust in person at a brick and mortar shop, simply because you will not have the opportunity to reassure the person face-to-face. However, there are a few simple techniques you can use to help build trust on your ecommerce site and make your customers feel confident while they shop.

Invest in Usability and Design: For the average internet user, it only takes 15 seconds for them to decide whether to stay or leave. This means your site’s appearance and first impression matters, a lot. Make sure that your website has a professional look and feel that exudes reliability in every way. Your site will need attractive visuals, well written and error free content, links that actually work and fast loading times throughout the site. Usability also needs to extend to the sites payment gateway; invest in a robust platform that provides well known payment methods and thoroughly tested security.

Deliver Great Customer Service: Aside from responding to every email, social question and general inquiry you receive, if you want to ensure customer trust you need to make sure these responses satisfy the customer. An e�ective way to get started is to create a simple and easy to locate web form where users can ask questions. Route these questions to a central support mailbox and filter based on question type. To really impress customers you can send out auto-responses that notify the message has been received and follow up with a personal response at a later time.

Finally if you really want to develop a lasting customer relationship and improve trust, you’ll need to be prepared to extend you customer service needs to beyond the final sale. Services such as free returns and warranty support help to show customers that you believe in the products and services you provide, and you are willing to put down your own money to prove it.

Be up Front about Pricing: Each day thousands of transactions are lost due to abandoned shopping carts. With such a huge problem at hand you may be wondering what leads customers to desert their shopping experience. The answer is hidden costs. If you really want to gain trust be sure to disclose full costs as soon as possible in the shopping process. If you try to hide costs such as shipping and reveal them at the last moment, the customer will feel deceived and will be far less likely to continue with your business.

PAYFORT INSIGHTThe examples we shared above are just a few of the changes you can implement to make your site feel more secure and start building trust. However if you really want to provide the best experiences and build better relationships with your clients, try thinking like a consumer. If you were buying something from you site, what security measures and support elements would you like to see? The more you start to think about your ecommerce as a consumer, the better experience you'll be able to provide.

Finally, remember what we shared earlier in this section; trust takes time. Be prepared to work with customers and adapt to their needs if you want to become their go to ecommerce shop.

103#stateofpayments

E-COMMERCEUTOPIA

ECOMMERCE UTOPIA

Over the past 20 years, the internet has changed the way the world exchanges goods and services. Do you remember buying airline tickets before the internet? Can you imagine buying a new computer or car without doing at least some level of web research?

In the mid-1980s, CompuServe added a service called the Electronic Mall, where users could purchase items directly from 110 online merchants. While the Electronic Mall wasn't a huge success in its day, it helped paved the way the ecommerce we see today.

As the ecommerce market continues to grow and evolve, we are striving to create a marketplace that empowers consumers and allows businesses to deliver their products as e�ciently as possible. It is a world which we are still building virtual brick by virtual brick, but as every year passes we are moving closer to an ecommerce utopia.

Daydreams are a tool we can use to rehearse for the future and imagine new opportunities without risk. Allowing the mind to roam freely can aid creativity—but only if we pay attention to the content of our daydreams. That’s why we are inviting you to ecommerce utopia where you can explore some of the dreams and goals for the future of ecommerce on this planet.

Single Domain for All Your Needs

We can all agree that variety is one of the single biggest advantages of online shopping. The fact that in today’s world we can buy food, electronics, clothes and even a new car without leaving our home is absolutely amazing. But as incredible as today’s shopping experience is, in the ecommerce Utopia customers will be able to find anything and everything they want at on single, simple to navigate site.

Companies like Amazon, eBay and Alibaba are all fighting to achieve this goal, adding more products every day and ecommerce aggregators are continuing to grow larger and larger each year. In an ecommerce utopia, finding the product you want will be as simple as typing ‘Shop’ into Google.

Automatic Enrollment and Permanent Credential Storage

A major obstacle for the ecommerce world has always been collecting consumer information, particularly emails, phone numbers and credit card details. In ecommerce utopia our single shopping space uses existing databases to automatically enroll consumers; minimizing the hassle for both shoppers and businesses.

In addition to a simple and automatic enrollment process, ecommerce utopia provides permanent and secure credential storage for all users. O�ering benefits for both consumers and businesses, permanent credential storage means no more logging in and most importantly features like one click shopping.

Analytics to Better Direct Shopping Experience

Though there have been some concerns with consumers ‘over indulging’, there’s no denying that analytics and algorithms can be a very useful tool for shoppers hunting for new products. Ecommerce utopia brings some of the industry’s top algorithms together to not enhance an organization’s conversion rate but also ensure that consumers get exactly what they want when they when they want it.

Price Protection

Everyone knows the fear of paying too much, and for many consumers this can be a defining issue purchasing a product or abandoning the sale. One of the most powerful tools available to ease this fear is product price protection. In ecommerce utopia, this type of service will be provided to all customers, guaranteeing a fair and secure price on all purchases. For users who find the same product at a cheaper price, a credit for the di�erence will be deposited directly into their account. By erasing the fear of short term price drops consumers are far more likely to follow through with their purchases resulting in higher transaction volumes and a more reliable online marketplace.

105#stateofpayments

http://stateofpayments.com/sop16_vp/utopia/index.htmlhttp://stateofpayments.com/sop16_vp/utopia/index.htmlhttp://stateofpayments.com/sop16_vp/utopia/index.htmlhttp://stateofpayments.com/sop16_vp/utopia/index.htmlhttp://stateofpayments.com/sop16_vp/utopia/index.htmlhttp://stateofpayments.com/sop16_vp/utopia/index.htmlhttp://stateofpayments.com/sop16_vp/utopia/index.html


Pay on Arrival and One Click Buy

A major obstacle that continues to slow the adoption of ecommerce is trust. Many consumers are wary of buying online and scared of potential scams; as a result they do not feel comfortable sharing their financial information during the checkout process. To alleviate these stresses Ecommerce Utopia provides a streamlined checkout and unique payment procedures that put customers at ease.

The aforementioned “Automatic Enrolment” means customers no longer need to enter their financial details to complete a purchase allowing one click purchases. To help put the shoppers at ease regarding fraud payments are only finalized after the product has been delivered.

Same Day Shipping to Your Location

Instant gratification is something that online businesses around the world still struggle to achieve. In ecommerce utopia same day shipping is standard on all purchases and best of all products are shipped to you not your address using you phones GPS.

Free and Easy Returns

Ecommerce utopia encompasses every aspect of the online shopping experience, even when a customer isn’t happy with their purchase. For consumer’s that decide a product isn’t right returns are simple.Using the same direct to location shipping technology, a user simply needs to request a pickup at their current location and hand the product over. At handover the driver confirms pick up and the return is complete.

Rewards

Everyone loves to be rewarded and in ecommerce utopia consumers will be. Taking advantage of the same algorithms that direct shoppers the reward program is tailored to individual customers shopping habits to maximize their earnings.

107#stateofpayments

ABOUT THE REPORT

WHY STATE OF PAYMENTS?

Welcome to the State of Payments 2016 by PAYFORT. For the third year in a row we’re releasing our annual report that details the world of payments, ecommerce and innovation

across the Arab World.

We’ve collected data from both consumers and merchants to provide you with actionable insight you can use to create a more successful, profitable and consumer focused business.

Two years ago we released our first State of Payments report, something that evolved out of a desire to increase our own understanding of consumers in the region and share that

information with the growing business community throughout the Arab World.

In last year’s report, we strived to create something that not only contained the same consumer-centric data but also presented that data in a meaningful way. We wanted to create a fuller picture that incorporated the opinions of hundreds of merchants who

interact with consumers on a day-to-day basis.

In this year’s report we’ve once again reimagined how best to share the massive amount of data that is available within the Middle East’s ecommerce sectors. To do this we have refocused the report to not only explore current trends, but also address the real issues that

impact merchants on a day to day basis and share meaningful solutions for the future.

Over the past three years State of Payments has become our favourite content piece and we’d love to hear your thoughts on the report. Be sure to reach out via social media using the hashtag #StateofPayments or contact us via email [email protected] to share your thoughts. We have also provided a feedback section within the report where you can share

your thoughts.


ABOUT THE REPORT

ABOUT THE REPORT

The report is divided into four main sections: Trends, Demographics, Consumer Survey,and Challenges.

Geographically the report covers Egypt, Lebanon, Jordan, Kuwait, Saudi Arabia, Qatarand the UAE.

The report uses responsive, interactive sections allowing you to easily navigate through the data and locate the specific information you need. We have collaborated with Kotobee.com as a partner of digital publishing to allow the report to all digital libraries We hope you like it and

use it as a starting point for a conversation about the state of payments in the Arab World.

ABOUT THE AUTHORS

This report was written and created by the PAYFORT Team. Content was provided by Amira Abou Shousha, Omar Soudodi and Nardeen Abdalla with visuals created by Seham Syed.

Special Thanks for PAYFORT team members Ankit Shukla, Dalia El Gammal, Haitham Hawam, Harun Ramakumaran, Maarid Fazili, Maryam Albassam, Mohamed Sayed, Mohammad Qudah, Mohammad Al-Rifai, Muteb Alobeiwi, Rami Makerm, Rohn Munsayac, Sanjay Ramchandani,

Shereen Ghazy.

109#stateofpayments

ABOUT THE REPORT

METHODOLOGY

The PAYFORT team took great care to curate the data within this report. We worked with a range of partners, merchants and consumers to collect the required information and

focused on presenting the data in useful and easy to understand formats.

The heart of our research was carried out using detailed surveys that polled hundreds of regional merchants and thousands of consumers across Egypt, Lebanon, Jordan, Kuwait,

Saudi Arabia, Qatar and the UAE

This data was then reviewed by our in-house team of market analysts and country managers to ensure that the data collected aligned with real world trends across the region.

We have included detailed notes on the individual sections below. If you have any questions don’t hesitate to email Amira Abou Shousha via [email protected]. Also please let us know if you’re looking for a little bit more information on any topic, we’ll try our best to get

you what you need.

SECTORS

Each sector discussed in this report represents a section of the overall online marketplace. We have provided brief descriptions of each sector for your reference.

AirlinesRepresents online transactions that occur with regionally based airlines and local carriers, this sector does not include independent travel agencies, booking services or airlines based

outside of the countries studied.

Travel & TourismRepresents online transactions with third party booking services, travel agencies, and other

tourism based organizations (e.g. Hotels)

Events and EntertainmentRepresents online transactions that relate to venue based events, this section does not

include entertainment products (videogames, online streaming services, movies, etc.)

EcommerceRepresents online transactions that relate to the purchase of products and tangible goods,

this does not include services.

Marketplace ServicesRepresents online transactions that relate to the purchase of web based services such as

online streaming and gaming, recruitment, maintenance, classifieds.

TRENDSMarket Size

Our team used a bottom-up approach to evaluate the market activity and calculate overall sector sizes. We studied the number of consumers within each market and combined that data with detailed user behaviour to accurately estimate overall market sizes. We then reached out to companies across the region to verify that our data aligned with real world

observations within their respective sectors.

The transaction data for this section includes all transactions completed online regardless of payment method. This includes ‘In person payments’,’Cards and ‘cash on delivery’ based

transactions.

Growth forecasts are based upon historical rates as per data gathered between 2011 – 2015.


ABOUT THE REPORT

RatiosAcceptance and Refund ratios are based on data collected from businesses across the region. What is an acceptance ratio? This ratio simply tells us how many customers can successfully use their credit card on a website. This is based upon the number of credit card

transaction attempts and the number of those transactions that are approved.

What is a refund ratio? A refund occurs when the merchant and the customer agree to refund the purchase for one reason or another. Unlike chargebacks this transaction does

not involve the issuing bank.

All data collected was averaged to generate sector data and does not represent the performance of any single business within that sector.

SeasonalityThe data in these sections are not representative of the entire market and represent a projection based on surveyed merchants within each sector. The data is intended to provide a snapshot of the year’s seasonality across each sector however, due to

confidentiality requests we cannot reveal true transaction figures.

The figures charted on the graphs instead represent divergence from the 12 month average. So if transaction volume figure in September is 3,000 that means there were 3,000 more transactions

than the 12 month average.

The seasonality data is inclusive of online credit card transactions only. Cash-on-Delivery and in person transactions are not taken into consideration for this section.

DEMOGRAPHICS

The data in this section is based upon a survey of thousands of online buyers across Egypt, Lebanon, Jordan, Kuwait, Saudi Arabia, Qatar and the UAE collected using YouGov.

Additional data was sourced from and cross referenced with the World Bank database.

111#stateofpayments

ABOUT THE REPORT

CONSUMER SURVEY

Survey data was collected utilizing a YouGov based poll of thousands of consumers across the region. It also incorporates survey data gathered from industry responses to a custom survey created by PAYFORT. Respondents include SMEs (small and medium enterprises)

and enterprise level firms.

Some questions allowed respondents (consumers and businesses) to provide multiple answers and all respondents were not required to answer every question within the survey.

CHALLENGES

This section provides an overview of the key challenges PAYFORT has identified for ecommerce with the Middle East. This section draws information from interviews with

industry leaders and the PAYFORT strategy team.

Each challenge is structured to include a detailed breakdown of the problem, a list of potential solutions, and finally PAYFORT insight on how to best address these issues.

Ecommerce UtopiaThis section provides a look forward at what online business could become in the region and around the world. We consulted with PAYFORT team members from various

departments to identify major obstacles and creative solutions.

The section aims to spark the imagination and bring to light potential opportunities for the ecommerce businesses of tomorrow.

CURRENCY

All figures are in USD


ABOUT THE REPORT

O�ce 202, Level 2, BT Building, Internet City, Dubai, UAE | +971 4 4252690www.payfort.com

state of payments 2016

Data & Analytics