Amazon Payment Services is proud to launch re:Imagine Payments—a collaborative thought leadership forum fostering discussions, knowledge and innovation for the digital payments sector.
This forum aims to serve as a cornerstone for you to learn and embrace new facets of digital payments through informative white papers, blogs, fireside chats, roundtables and collaborative engagements.
What to expect:
• The macro and socio-economic trends driving digital payments in the MENA region
• Consumer behavior regarding digital payments
• Top themes within the MENA payments industry
MENA’s Digital Payments Landscape Is Rapidly Changing
There is no doubt that Covid-19 has had a profound impact on society. After all, we are still measuring the effects this event has had on the adoption of new technologies and digital solutions in MENA.
We’ve seen substantial activity from fintech startups with 85% of fintech firms in the MENA region operating in the payments, transfers and remittance sectors. Although only 3% of consumers in MENA are estimated to use cashless methods for payments, the accelerated rate of transition towards cashless payments stands at 25% annually, driven by structural, cultural and societal trends.
While many still prefer cash payments, digital environments are changing the way consumers transact. Many are moving away from traditional payment methods to alternatives like mobile based payments and digital wallets.This comes as more consumers wish to centralize their payments in one place and have increased control over the way they pay.
Younger Consumers and SMEs Are Driving Change
SMEs (small and medium enterprises) are the largest employers, providing jobs for 50% of private workers in Saudi Arabia, 75% in Egypt and 86% in the United Arab Emirates. As such, incentivizing and supporting these businesses plays a large role in economic policy for regional governments as they aim to diversify economic growth away from oil-based businesses.
In Egypt, SMEs (including micro enterprises) account for 98% of the private sector and contributed 43% of the country’s GDP in 2022.
The most established businesses in Saudi Arabia, Egypt and the UAE belong to Baby Boomers and Gen Xers who are more accustomed to cash and banking transactions. However, many young and digitally-savvy business owners are aware that widespread adoption of digital-first solutions promises efficiencies and increased capabilities that will allow their businesses to grow and thrive. As a result, many SMEs have already equipped themselves with the digital tools to survive in today’s competitive landscape.
In general, the region boasts a high proportion of younger demographics, including Gen Alpha (born after 2010), Gen Z (born between the late 1990s and early 2010s), and Millennials (born between 1981 and 1996). Altogether, these cohorts are estimated at 75% of the overall population in the region, in comparison with the global average of 67%. These groups are likely to drive long-term adoption of digital payments technologies in MENA.
In particular, Gen Z are the driving force for digital payments, thriving on innovation, convenience and seamless experiences. However, it is the Millennials who have the highest spending power.
The BNPL Market Matures Amid Strong Appetite for New Digital Payment Options
Consumers in the UAE have been strong adopters of Buy Now, Pay Later (BNPL) payment options for several years now. As the industry has evolved, the market has become more sophisticated and services like our own Installments payments are becoming a requirement for online merchants and no longer a nice-to-have.
In Saudi Arabia, growth of BNPL has been slower but still substantial. Competition among providers is intensifying, prompting the development of loyalty programs and discounts in order to acquire customers. Players in this space now compete by offering more rewarding and advanced options for their merchant partners, finding new ways to offer flexibility for ecommerce retailers and the end customer.
In Egypt, the current economic situation and hurdles in consumers’ ability to get bank loans have made the option to pay in installments with BNPL services increasingly attractive. This trend is set to increase with the potential adoption of more intuitive credit checks, which will allow customers who do not receive a fixed income (such as freelancers) to access BNPL options more easily.
Keen On Learning More?
For more information about the world of digital payments, fintech solutions and the evolution of a cashless economy across Egypt, the UAE and Saudi Arabia, read through the full white paper, “What’s Next for Digital Payments in the Middle East and North Africa.”
Estimates and prospects set out in this blog are taken from the white paper prepared based on in-depth research into the payment industry done by Euromonitor International and sponsored by Amazon Payment Services. The legal disclaimer “Estimates of segment share may be incomplete and unreliable and/or may not include a full set of substitutable products.” will also be added at the end.