Ayfort, the leading online payment service provider in the Arab world, has announced its third State of Payments in the Arab World report, offering up-to-date data and insights in the region’s payment trends and consumer buying habits. Based on the seven key country markets studied, the region saw a 23 per cent increase in online payments during 2015, led by strong growth in Saudi Arabia and the UAE, showing 40 per cent and 24 per cent year-on-year growth respectively. Meanwhile, the report forecasts that the volume of online payments could increase nearly three times by the year 2020 to reach more than $69 billion of transactions per annum.
Payfort’s State of Payments in the Arab World focuses on the seven markets that it operates in (Egypt, Jordan, Kuwait, Lebanon, Qatar, Saudi Arabia and the UAE), and the report tracks online payment transactions in the airline, travel, ecommerce (online shopping) and entertainment sectors.
'Our research team has been very focused on how to make this annual report as useful as possible for businesses in the region,' says Omar Soudodi, managing director of Payfort. 'So, in addition to exploring current trends and future predictions, this year’s report aims to shed some light on some of the real issues that impact merchants on a day-to-day basis and present actionable insights and possible solutions for the future.'
The new report shows strong growth in online shopping across different sectors, with transactions in the airline sector increasing by 18 per cent from 2014 to 2015 and in the travel sector by 39 per cent.
The acceptance ratio across the region, indicating consumer acceptance to pay online, continues to grow. Egypt, Jordan, Kuwait, Qatar, Saudi Arabia and the UAE all now have more than 50 per cent acceptance for online payments, with Saudi Arabia and the UAE having the highest percentages, at 58 per cent and 71 per cent respectively. Airline bookings and business-to-business marketplaces saw the highest acceptance rates in Saudi Arabia and the UAE, with travel services proving most popular in Kuwait and Jordan, travel and entertainment in Lebanon and airlines, entertainment and B2B marketplaces being most accepted in the State of Qatar.
The UAE continues to lead the region in terms of adoption with 71 per cent of the country shopping online, while Jordan lags further behind since only 50 per cent of its population is online. However, the report shows that there are some clear differences between consumer habits and preferences country-to-country. For example, the top two product categories bought online in the UAE are flight tickets and clothes, while in Egypt these are mobile phones and utility bills, in Kuwait and Saudi Arabia the top two items purchased are flight tickets and utility bills.
The role the internet plays in consumer shopping remains varied, with 17 per cent of shoppers stating that they complete their entire shopping journey online and 67 per cent relying on online research. Nine out of ten consumers surveyed said that they check product reviews online before making an online purchase.
Meanwhile, trying to encourage consumers to use online payment options can have its challenges and many of these stem from consumer resistance to new payment methods and technologies. Cash-on-delivery remains the preferred method of payment for 51 per cent of Arab shoppers: a percentage that soars to 70 per cent in the case of online shoppers in Egypt.
'Despite the enormous growth in the number of consumers buying online, there are still many challenges for Middle East businesses,' says Soudodi. 'Fear of electronic payments, fear of fraud, fear of new technology and a lack of trust in online services all remain significant obstacles for consumer marketing in the region. Meanwhile, the consumers that are paying online demand faster and easier checkouts, while simultaneously expecting increased security. Rising expectations put a lot of pressure on merchants.'
Credit card adoption across the region varies greatly between countries, with Kuwait and the UAE having the highest penetrations of 97 per cent and 89 per cent respectively. Qatar and Saudi Arabia have about 45 per cent adoption and Lebanon just 15 per cent credit card penetration. Among those consumers that pay online, most consumers registered a significant level of confidence in payment security and confidentiality, although much less confidence in online privacy.