Checkout.com: On Digital Payment and the rise of E-commerce in MENAPT
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Over the past 3 years, the FinTech industry in MENAPT has been on a rise to become the second most-funded ecosystem and the most active (by number of transactions) industry in 2021 YTD. In MENA alone, the FinTech industry observed a 134%YoY growth in funding as most recently recorded in our August 2021 Venture Investment Dashboard, driven by major rounds by startups including Tabby, Capiter, and most recently BitOasis. Yet, what’s even more interesting is startups’ investment in Financial solution integration, especially digital payment solutions, across industries. Startups like Saudi-based Foodics in F&B, Morocco-based Chari in E-commerce, and even Saudi-based Nejree championing the Try Now Buy Later model in Fashion retail, have all integrated digital payment solutions into their offerings.
Uk-based FinTech and connected payment provider Checkout.com has recently released their research into E-commerce and digital payments across the Middle East, North Africa, and Pakistan, finding the region to be brimming with innovation and opportunity. They share with us key highlights from their findings:
Across every market in MENAPT, a digital revolution is underway as governments encourage innovation to transform their financial infrastructures. Accordingly, consumers are responding with an unprecedented adoption rate of digital commerce and payments platforms. These powerful themes run throughout Checkout.com's second annual study into the payments and commerce trends across the MENAP region. The survey of 13,000 consumers monitors year-on-year shifts in behavior, providing insights into the trends that matter.
MENAP's digital commerce boom continues
In 2020, consumers across the region rapidly embraced digital commerce due to the COVID-19 pandemic. And in 2021, that trend has accelerated. Consumers say they're using digital commerce more than last year and for a wider variety of goods and services. This includes everyday items such as meals, groceries, and household goods.
The momentum behind the region's shift to digital commerce looks set to strengthen as we move into 2022. The research finds that 83% of consumers plan to maintain or increase their current level of E-commerce spending. Should this happen, MENAP will continue to be the world's fastest-growing E-commerce market, worth over $49Bn according to Visa.
The rise and rise of buy now, pay later
Consumers are increasingly abandoning legacy payment methods, such as cash-on-delivery and bank transfers, for digital payment methods as they become more comfortable shopping online. Keeping up with these fast-changing consumer preferences and habits is critical for businesses to remain competitive and capture more revenue.
The data yielded in the research reflects what Checkout.com has seen on the ground in the past year, especially concerning the growth in the use of buy now, pay later (BNPL). MENAP has become a quiet leader in the BNPL space, with 24% of consumers in the region saying they've used BNPL in the past year. This is due mainly to the payment method addressing the long-standing trust deficit around prepayment and serving as a suitable digital alternative to cash-on-delivery.
Reimagining the digital storefront
The pervasiveness of digital commerce is creating opportunities for businesses to reimagine where and how they interact and win customers. For instance, MENAP's consumers increasingly cite marketplaces, apps, or social media as their preferred shopping channel. The data finds that MENAP now outstrips most Asia Pacific countries for social commerce preference. Being able to offer the right payment options in-channel will be critical to tap the opportunities available.
Other brands are ramping up their omnichannel approaches to cater to consumers’ ongoing search for personalization, convenience, and human-centric customer service. Consequently, retailers are increasingly connecting with customers via channels like WhatsApp, ushering in a new era of ‘conversational commerce. Digital payments are a gateway to MENAP's continued growth and economic prosperity
Data shows that the growth of digital payments and E-commerce has enabled new cross-border activities with consumer money flowing between countries in the region, and globally, as never before.
Consumers are also spending more with brands outside of their home market. Thirty-three percent say that buying products or services not available in their own country is the number one reason to shop online. This trend creates a tremendous opportunity for merchants to expand their presence and tap into new consumer markets. But that's only if they can successfully navigate the fragmentation and complexities of the region's payment landscape. And the quickest and most effective path to unlocking this opportunity is working with a partner that can cut through the complexity and guide businesses to unlock growth.
Download Checkout.com's latest report to discover more payment insights from the fast-evolving MENAP region.
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