Market Trends of MEA Payment Gateway Industry
Increased E-commerce Sales and High Internet Penetration Rate
- As online shopping gains momentum in MEA countries, the demand for payment gateway solutions is witnessing a notable uptick. With businesses increasingly establishing their online presence, the necessity for secure and efficient transaction processing becomes paramount. Notably, countries such as the UAE, Saudi Arabia, and South Africa are witnessing a robust expansion in e-commerce, underscoring the pivotal role of payment gateways in their digital infrastructure, especially for managing millions of transactions daily.
- The UAE e-commerce market caters to a diverse array of consumer needs and preferences. Leading categories in this market include fashion and apparel, electronics and gadgets, beauty and cosmetics, grocery and food delivery, and travel services. Notably, as reported by PPRO, a financial firm, in 2023, toys, DIY, and hobbies emerged as the dominant e-commerce category in the United Arab Emirates, commanding a significant market share of 29%. Fashion closely trailed, securing a 27% share.
- In June 2024, Adyen, a global financial technology platform for businesses, collaborated with noon, an e-commerce platform in the region. This collaboration aims to bolster the region's digital economy. Due to its swift expansion, noon established 'noon payments,' a proprietary infrastructure tailored to its payment requirements. Now, with Adyen's partnership, noon seeks to elevate payment solutions for both merchants and customers in the area.
- With the expansion of internet access across the MEA region, particularly through enhanced broadband and mobile connectivity, consumers are increasingly participating in online activities, including shopping, bill payments, and digital banking. In countries like the United Arab Emirates and Saudi Arabia, where internet penetration is notably high, there's a surge in digital payments. This uptick underscores the growing demand for payment gateways to ensure transactions are processed seamlessly and securely.
- For instance, in 2023, the Aani Instant Payment System saw a surge in activity, with transactions jumping to 64.1 million and a total value of AED 164.7 billion (USD 44.84 billion). This marks a notable increase from 2022 when the system recorded 38.3 million transactions worth AED 101.2 billion (USD 27.55 billion), as reported by the Central Bank of the UAE (CBUAE).
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Saudi Arabia is expected to hold a major share
- Saudi Arabia's Vision 2030 strategy seeks to diminish the nation's dependence on oil, steering its focus towards sectors like technology and digital services. In line with this vision, the government has rolled out initiatives championing a cashless economy and bolstering digital payments. This modernization drive is not only accelerating the uptake of e-commerce but also amplifying the demand for payment gateways. Central to this evolution are programs like the Saudi Payments Network (Mada) and the Financial Sector Development Program.
- Saudi Arabia boasts one of the region's largest e-commerce markets, buoyed by widespread internet access and a surge in online retail platforms. With the e-commerce sector's expansion, the demand for trustworthy and secure payment gateways intensifies. Saudi online shoppers increasingly seek seamless payment solutions, propelling the payment gateway market's growth.
- For example, in August 2023, Arabian Business Machines (ABM), a distributor of Toshiba in Saudi Arabia, unveiled its e-commerce platform. This initiative aims to bridge the gap between Toshiba and its end users, offering easier access to authentic Toshiba Toners. This move is set to enhance print quality for professionals and businesses reliant on Toshiba products.
- As the digital landscape evolves, security emerges as a paramount concern for consumers and businesses alike. Recognizing this, Saudi Arabia's regulatory framework underscores the significance of secure transactions. Initiatives are in place to ensure payment gateways align with global security benchmarks, notably the PCI-DSS (Payment Card Industry Data Security Standard). This heightened emphasis on security has catalyzed the swift adoption of digital payment gateways, especially those boasting encryption, tokenization, and robust fraud prevention measures, carving out a lucrative niche for secure payment solutions.
- For instance, data from WorldPay highlights a notable shift in Saudi Arabia's payment landscape: the diminishing dominance of cash at POS. With a growing endorsement of credit cards and mobile wallets, WorldPay forecasts that by 2025, cash will no longer be the predominant payment method in physical stores. This shift is underscored by the anticipated rise in the number of wallet users like Saudi Telecom's STC Pay.
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