1. 2012
Mobile Payment in the MENA
Region
Paritosh Kashyap

2. Mobile Payment in the MENA Region
All around the globe, mobile phones are becoming an integral part of daily lives. There are
presently 5 Billion mobile phone users across the globe. The role of a handset is not just
restricted to talk. It is being used for diverse purposes- text messages, photographs, surf, social
network, multi media consumption etc.
One of the areas where mobiles have made headway in the recent past is payment. Usage of
mobile devices to transfer money or make purchases is mounting up across the globe. The
emergence of sophisticated smart phones has given it a further boost. Presently there are 1.08
Billion Smart Phones users around the world. M-commerce- as it’s commonly known- can be
done either by linking the handset to the bank account or by simply topping up. The later part
is more popular in many of the emerging economies in Asia, Africa & Middle East- regions
marked by high mobile penetration but low penetration of bank accounts.
240
250
200
150
100 69
50
2.4
0
2001 2009 2011
Fig 1: Shows the growth of Mobile-payment or M-Payment over the last ten years in us $
billions. Source: Inter Bank Financial service infographics.
Types of mobile payment
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3. Mobile Payment in the MENA Region
Mobile as a point of sale: with the help of a dongle, merchant’s mobile phones can be
used for processing credit card payments.
Contactless payment: works on the NFC technology. NFC, or near field communication
is set of protocols which allow smart phones to communicate with each other or other
devices, with in a very small distance. Credit card info or some other loyalty program
info could be loaded into the mobile phone – which could be eventually used for making
the payment at the point of sales.
Direct Carrier billing: phone number is shared with the merchant & the charge appears
on the mobile bill. Is costliest among all the existing solution, but ensures a very high
degree of security. It’s used more in selling digital goods & applications.
Types of M-payment Companies involved
Mobile as a point of sale Square, intuit, PayPal,
VeriFone
NFC Isis, Visa pay wave, Google
wallet, Master Card pay pass
Direct Carrier billing Zong, Boku, Bill to Mobile,
mopay, payfone
Table 1: Shows the list of various companies active across various types of Mobile payment.
Source: Venturebeat.com
Major Players involved in M-Payment
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4. Mobile Payment in the MENA Region
Payment processing network companies- Companies like Visa, MasterCard & American
Express are digitizing their wallets. They are also collaborating with device
manufacturers to develop NFC enabled mobile payment.
Banks: Banking operations such as balance inquiry, payment & transfer of money can be
done over the mobile phone. The initial form of Mobile Banking initiated via SMS was
known as SMS banking. Advent of better technologies eventually lead to advance
version such as WAP & web based banking. This further graduated to installation of
advanced banking application on the mobile phone. These applications ensure better
user interface & experience, enhanced security & pre stored user data.
Technology startups- Lot of application developers & technology startups such as-
Square, Zong are emerging with high end technological solution, designed for the
mobile payment landscape. Some of the leading players are as follows –
a) Card.io: Have developed an application to process credit card payments through
phone. One needs to hold the credit card up to the phone. The camera in the phone
will read the details in the card & authenticate the payment without involving any
typing.
b) Zong: A carrier billing solutions, where the phone number is shared with the
merchant & the charge appears on the mobile bill.
c) Square: Are dongles attached to the merchant’s smart phone our tablet & can process
credit cards.
Network Operators- Operator led money transfer can be an additional source of income
for operators. It can be implemented either by linking the network with a bank account
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5. Mobile Payment in the MENA Region
of credit card or with the help of top ups. The top ups do not require existing bank
accounts.
Web Companies- Web giants like Google are also entering into the rapidly evolving
market of mobile payments.
Present industry scenario
As discussed, due to the increase in popularity of M-commerce, many big financial institutions,
web companies, payment companies, application developers are jumping on the bandwagon.
Visa has made strategic investment in Square (mentioned above)- a mobile payment platform.
Google has launched “Google Wallet”- a mobile payment system. The 3 giants in USA- AT&T,
Verizon & T-Mobile have joined hand to incubate ISIS- a mobile payment space, expected to be
piloted in mid 2012. PayPal has acquired mobile payment provider Zong (mentioned above) for
US $ 240 Millions.
7,000 6,200
6,000
5,000
4,000
3,000
2,000
670
1,000 240
0
Global credit card Mobile payment (2011) Mobile Payment
payment (2010) (2015, est)
Fig 2: shows figures for credit card & mobile payments. Source: Visa 2011 annual report. Values
are in US $ billions.
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6. Mobile Payment in the MENA Region
Mobile Payment in the Mena region
Middle East & North Africa Region (MENA) is one of the most fertile grounds for Mobile
Payment. It basically has two types of market base-
High end customers residing in Gulf countries & other parts of the region with
sophisticated smart phones & high disposable income.
Unbanked individuals which includes vast population in North Africa & Levant as
well as expat workers living in GCC. They can use mobile phones for money
transfer, remittances & payment. Mobile technology in convergence with financial
institutions & network operators can be a very effective tool for financial inclusion.
Such model has been extremely successful in Kenya in the form of M-Pesa &
requires neither a sophisticated handset nor a bank account.
Advantage Middle East & North Africa
High mobile penetration: MENA has an overall mobile penetration of around 90%. By
the end of 2012, it’s expected to see 250 Million mobile phone subscriptions. By 2016,
additional 100 Million phone subscriptions are expected to be added. In terms of volume
Iran is the biggest market, followed by Saudi Arabia.
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7. Mobile Payment in the MENA Region
Uae 99%
Saudi Arabia 95%
Iran 91%
Egypt 90%
Morocco 90%
Oman 77%
Jordan 75%
0% 20% 40% 60% 80% 100%
Fig 3: Shows mobile penetration for some of the selected mena countries. (Multiple handsets
have not been considered). Source: Insights Mena
Expat Work Force: In Gulf countries, a large percentage of population comprises of
expat population- large no. of which are part of industrial work force. Large volume of
remittances is send through them. Saudi Arabia itself witnesses an annual outflow of
US$ 100 Billion as remittances. Mobile payment can be a suitable option for money
transfer as well as salary payment for such workforce- given the fact that many of them
do not have bank accounts.
Comfortable with mobile payment: In MENA region people are credit card shy. Cash &
carry culture predominates over credit cards. Fortunately the same does not hold true, in
case of mobile payment. A research conducted by Plus 7 on 4000 smart phone users in
the region, shows that individuals intend paying by their mobile phones.
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8. Mobile Payment in the MENA Region
Bahrain 40%
Qatar 33%
Kuwait 33%
Uae 33%
Saudi Arabia 33%
Egypt 33%
Oman 25%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Fig 4: shows the percentage of respondents for various countries who are comfortable
purchasing products on their phone. Source: Plus 7.
Other than the above mentioned points, there is lot of other factors- conducive for the growth of
Mobile Payments in the MENA region. One of them is the young demography in the MENA
region. A vibrant younger population ensures quick adoption of newer technologies.
Given the fact that MENA is a fertile ground for Mobile Payment, many companies, across the
globe are entering or planning to enter in to the market. Some of them are Brick2Click.com, Mi-
Pay, Mobibucks, and Gemalto etc. The given list table shows, some of the companies –
Name Country Type/ services
Mi-pay UAE M-payment services
for -Fin, utility,
network operator &
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9. Mobile Payment in the MENA Region
media comp.
M-pay Kuwait Top ups, bill
Mobibucks Uae M-payment solution
provider to bank &
merchants
Jiring Iran Salary, purchase
Gemalto (planning Pan Middle east Service provider for
phase) bank, network
operator
Table 2: shows some of the M-payment providers in the region. Source: Zawya, Wamda
The unique socio-economic factors, coupled with the young demographics in the region makes
the MENA region optimum for M-commerce & M-payment to flourish. Many consumers have
jumped directly from cash payments to mobile payments, by passing the credit card mode. For
many merchants, inclusion of a M-payment system is not just optional but indispensable. But
there are some bottlenecks as well. Not all local banks are well equipped to provide M-Payment
gateway. There is also a very serious dearth of local Arabic applications. A lot more needs to be
done to consolidate MENA as a strong base of M-Payment. In order to realize this- network
operators, technological solution provider, financial institutions & regulators- all need to work
in convergence.
Source: Read Write Web, Infosys.com, Mashable, Digby, IBFS, Zawya, Wamda,
DailyMenadeals, Thenextweb, Zawya, Wamda, Insights MENA, Venture beat.
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10. Mobile Payment in the MENA Region
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