Online Payments: The MENA Startup’s Survival Guide

Tune in to our latest webinar to discover more about online payments in MENA. This week, MAGNiTT CEO Philip Bahoshy hosts Muhannad Ebwini, Founder and CEO of HyperPay to explore the behaviour of online payments and how it has evolved in the region.

Check out the full discussion, and watch the Webinar below:

They discussed several topics, including:

How HyperPay have built a relationship with the regulators in the region as they look to scale the product

Muhannad believes that this is a challenge, he says that the Middle East market is very big, even if we refer to smaller markets such as the GCC, each of them have their own banking systems and they have their own regulators. You have to take action and care with every regulator in the region.

He shares that when they first came to Jordan, there were no rules for payment gateways, 'they allowed us to do their work and the gateways would monitor us'. Whenever they needed anything, he would provide reports and so on. This is similar to Saudi Arabia. However, with Egypt, Bahrain, and so on, you needed approval and a license from the central bank.

The types of potential that is coming out of Saudi Arabia that can be applied to the rest of the region

Muhannad says that Jordan and Lebanon are good countries to start with. You have good technology resources, marketing, the market is small, you can launch your product at a low cost, and can test your product, but if you want to scale then you have to go towards a big market such as the KSA, UAE, or Egypt.

In terms of HyperPay, they focused on Saudi Arabia, which was in fact a strategic decision. This was due to, 1. Muhannad had strong, previous experience in Saudi, spending 7 years working on fintech and technology there, so he knew the market well. 2. These types of payments were new to Saudi. The UAE on the contrary was saturated with payment gateways. Therefore, they decided to focus on KSA and take the maximum market share that they could and then expand.

Muhannad believes that the KSA market is the most advanced market for fintech, and even in banking. There is a huge opportunity as the market is so big and people are converting to online.

Why there was not as much digital adoption for online payments pre-COVID-19

Philip shares that in the region there is a perception that digital has not been adopted en-mass whether that is cash on delivery etc.

Muhannad says that cash on delivery is a luxury product for the users. The same user who is paying in cash for local things, and using his card for international payments, when given the option to receive his product first, check it and then pay for it, its an easier and more reliable process for him.

With the boom of e-commerce, lots of websites have come up, however some of them have been scams, not selling original products. So there is also a trust issues; the trust with smaller merchants is not there yet.

What the user behaviour is now as people are having to use digital platforms due to the lockdown

Muhannad believes it is a must to use it as the government in KSA stopped all cash on delivery services. 69% of the population have paid online in the past 2 months, the number increased from around 30%.

What factors a company should review before making a decision about a payment gateway when they want to incorporate it as a vendor

Muhannad says that multichannel/cross-channeling selling including e-commerce is not a commodity anymore, it is essential and is a strategic decision for everyone. This is the same for choosing your processing partner.

He says that the processing time of a payment is maybe less than a second, but there are a lot of things happening. From fraud checking, getting approvals, making the settlements, assessing the risk of the transactions, and so on, is a very complicated process that happens within these few seconds.

There are two main factors to look at: 1. Before the transaction and 2. After the transaction.

With regard to before the transaction, you have to choose a stable payment processing where the integration process is easy. The UX/UI design/usability of the payment gateway should be seamless. There needs to be a seamless transaction. You have to have a payment gateway that offers local payments, not just Visa or Mastercard. You have to offer everything. HyperPay have a team that monitor the transactions and the different behaviours, they monitor the rejections rate and provide analysis for the merchant. If there is anything that can help, for instance, a tech issue or changing the design of the page, a problem with the issuing bank, the team is ready to coordinate with the merchants and the banks and get the best acceptance rate.

Muhannad discusses the importance of having a reasonable price for the payment gateway – not the cheapest or the most expensive, you have to compromise.

You have to create a localised product, products that are targetting and solving issues within the market. HyperPay created products that solved issues for their merchants, banks, and the government. That’s a big differentiator between a gateway who knows the market/trends and an international payment gateway that simply sells a direct product.

The red flags that you should be aware of if looking at a payment gateway before committing to a decision

Muhannad says that you have to check the reputation of the payment gateway in the market and get feedback from other merchants, big and small.

It's not easy to move from one payment gateway to another. It’s a careful decision, so choose the right partner, stay away from gateways that have lots of downtimes, risk issues, and if they have multiple frauds on their merchants. They need to be able to have a payment gateway that can design a product for them.

Other topics included, if HyperPay is active in Egypt, what tools you should use to conduct analysis for the merchant, what is the COVID-19 impact on the cost element for HyperPay, payment trends in KSA, if people have enough access to credit cards in KSA, and much more.

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