How to master payments in MENA

The Middle East and North Africa (MENA) represents tremendous opportunity for ecommerce and fintech merchants. Our research found 80% growth in the number of consumers who shop online daily since 2020. In Saudi Arabia alone, the growth is 90%. Digital transformation is opening up the MENA market to online merchants like never before.

That said, in-market expertise is invaluable; differences in payment method preference, local regulations and culture inform buying cycles, engagement, and revenue possibilities. With over a decade of experience working in digital commerce in MENA, I have seen first-hand just how crucial it is to take a measured and well-researched approach to expansion here.

Checkout.com is well-established in MENA, recording 658% growth in payments volume since 2020. Unlike in the US and Europe, enthusiasm for online shopping has not diminished in the years following the pandemic. Instead, we continue to observe increasing demand for digital commerce. Saudi Arabia has seen a 180% growth rate for weekly digital shopping, while the UAE and Kuwait closely followed with 140% each.

This region is growing extremely fast, and evolving very quickly. With that in mind, I want to share my most valuable insights to help you master payments in MENA.

Choosing the right payment methods

You cannot take your payment method mix in one country and apply it to another one. Local preferences vary, and the MENA region is a complex place. When you enter the region, you need to make sure that you have the right strategy. That includes careful selection of payment methods. 

Muzzammil Ahussain, CEO, Almosafer (part of Seera Group), explains how a local focus helped his travel business to gain market share. “When we started we were very, very localized. We had a very strong understanding of the customer in Saudi. As we grew, we really focused on localizing not only payment methods but also the entire customer experience.” Part of this was being an early adopter of Mada payments, with Checkout.com being the first payments provider to offer it.

Over several studies we have carried out on payments in MENA, we’ve consistently found an uptick in digital wallet use. This runs in parallel with a decline in the use of cash on delivery – we measured a 51% decrease in shoppers who stated this is their preferred payment method.

These are some of the most important local payment methods in the Middle East:

• Mada in Saudi Arabia
• KNET in Kuwait
• QPay in Qatar
• OmanNet in Oman 
• Benefit in Bahrain

Not offering KNET in Kuwait means that 70% of your customers cannot pay. Going to Saudi Arabia without supporting Mada means at least 60% of your customers cannot use a local payment card. Usually we use the terminology of ”alternative payment methods” (abbreviated to APM). But if you go to Oman and you don't have OmanNet, you lose 90% of the volume. So there is not really an “alternative” to that! In a sense, Visa/Mastercard are the “alternative” payment methods in these countries.

An adaptable payment solution like Flow automatically offers the most favorable payment method to your customer, based on their region and preferences. It also ensures the checkout experience is localized, namely, that the shopper can pay in their local currency and data fields are in the local language.

Focus on your payment performance

Taking digital payments is not without its challenges. Like any online merchant, you will need to pay close attention to the security features of your website, app, and pay flows. A concerning 33% of consumers in MENA report they’ve been a victim of fraud. This highlights the need to build fraud-prevention into every stage of the buying process online.

“You need to have good partners to fight fraud,” shares Benjamin Canova, Global Payment and Fraud Manager, Louis Vuitton. “You need to fight AI fraud with AI or machine learning. There’s no other way, because of how easy it is now to access technology on the Dark Net which enables fraud.” The best combination is machine intelligence plus human review; fraud-prevention algorithms become more accurate when humans provide targeted feedback in line with the business’s risk appetite.

Fighting fraud requires laserlike focus; if your fraud prevention strategy is too heavy-handed, you will turn off customers and drive down revenue. When payments are wrongly flagged as fraud and rejected, this is known as a false decline. Between one in five (21%) and one in four (25%) adults across six countries in MENA have experienced a payment decline despite having sufficient funds in their account. 

False declines are a major problem for these reasons:

• This is an intensely unpleasant experience for the customer
• You may lose the sale altogether
• The customer may not come back to your brand in future
• It’s a preventable problem

On average, 30% of MENA shoppers would purchase an item from a different website following a single false decline. They don’t even retry the payment once. What that means is every false decline pushes one in three of your customers from checkout to a competitor. 

To focus on payment performance means investing in technology which strikes the balance between fraud prevention and intelligent payment processing. Given the range of issuer preferences is so vast, it makes sense to use machine learning (ML) to assist decision-making with payment routing and formatting. For instance, Intelligent Acceptance runs tests to find the “optimizations” that will improve the chance of legitimate payments achieving issuer acceptance. Issuer A may prefer to receive the customer’s shipping details in a certain format, while issuer B may support frictionless authentication with additional device data; an ML-powered engine can adapt payment messages and adjust transaction flows to ensure alignment with each one.

Our report on The State of Digital Commerce in MENA 2024 goes into more detail on buying habits and payment trends in the region.