Mobile Commerce and Local Payment Methods in the Middle East and Africa – Opportunities and Challenges for Merchants.The Middle East and Africa regions are witnessing a rapid rise in e-commerce, largely driven by mobile commerce. According to a recent report, mobile commerce is expected to constitute 70% of online transaction value by 2025 in the Middle East and North Africa (MENA) region, while the wider Africa region is forecasted to have half a billion e-commerce users by 2025. This increasing adoption of e-commerce presents significant opportunities for merchants who are willing to offer locally-used payment methods to boost their revenues.
Revenue Opportunities for Merchants
To tap into the growing e-commerce market in the Middle East and Africa regions, merchants need to offer locally-used payment methods. This is crucial for boosting conversion rates and revenues. Local payment methods include mobile wallets, bank transfers, and cash-on-delivery, among others. Merchants must accept a wide range of payment methods to cater to the diversity in payment habits across the region. The report emphasizes that offering localized payment options can enable merchants to capture and convert more transactions, and reduce cart abandonment rates.
Payment Methods and Card Types Used in Each Country
One of the key findings of the report is that there are wildly varying differences in e-commerce infrastructure from country to country. The report outlines the payment methods and card types used in each country, demonstrating the importance of being able to accept locally-used payment methods. Across the MENA region, credit cards are the most widely used online payment method, followed by bank transfers and cash-on-delivery. Merchants must be able to accept these payment methods, alongside digital wallets, to ensure the success of their e-commerce ventures.”
Infrastructure Required for Successful E-Commerce
Successful e-commerce depends on various factors, including high levels of internet and mobile network penetration, widespread supply chain logistics and transport infrastructure development, and the ability to accept digital payments through a range of methods. The report emphasizes that these infrastructure requirements must be met for e-commerce to be viable and successful. In addition, merchants must keep up with changes in technology and adapt their strategies to accommodate these changes.
The report highlights the wide disparities in e-commerce infrastructure in the Middle East and Africa regions. For example, countries like the United Arab Emirates and Saudi Arabia have high levels of e-commerce infrastructure, including robust logistics and financial systems, while other countries like Somalia and South Sudan have limited or no e-commerce infrastructure. This presents challenges for merchants seeking to operate across different markets in the region, emphasizing the importance of tailored strategies for each market.
Mobile Commerce as a Common Denominator
Despite the differences in e-commerce infrastructure across the region, mobile commerce is a common denominator driving e-commerce growth. As mentioned earlier, mobile commerce is set to comprise 70% of online transaction value by 2025 in the MENA region, while the wider African region is forecasted to have half a billion e-commerce users by 2025. Merchants must, therefore, prioritize their mobile commerce strategies, including mobile-friendly websites and apps.
Widely Used Payment Methods
Credit cards are the most widely used online payment method throughout the MENA region, followed by bank transfers and cash-on-delivery. However, with digital wallets gaining popularity, their usage is quickly catching up with credit cards and is set to overtake them in the next few years. The report shows that digital wallets currently account for around 20% of online spending in the region.
Rise of Digital Wallets
The report shows that digital wallets are gaining popularity in the Middle East and Africa regions. Digital wallets offer consumers the ability to store multiple payment methods in one place and make payments without the need for a physical card. Digital wallets are also convenient for merchants as they reduce the chances of failed transactions due to misbehaving cards. Merchants must, therefore, accept digital wallets to keep up with the shift in payment habits across the region.
Launch of Report and Timeliness
The launch of the report is timely, as the value of cross-border payments is expected to reach $250 trillion by 2027. E-commerce businesses are seeking comprehensive advice, support, and firsthand market insights to help them seize new opportunities in the fast-evolving e-commerce space. The report offers practical recommendations to merchants seeking to enter or expand their presence in the Middle East and Africa e-commerce markets.
The conclusion and importance of localized payment methods is that successful e-commerce in regions such as the Middle East and Africa require a deep understanding of the local preferences and habits of payment. Merchants must carefully adopt localized payment methods, local currencies, and tailored payment acceptance strategies to each market to drive more transactions and reduce cart abandonment rates. By doing so, business owners can tap into the significant revenue opportunities presented by the growing e-commerce market in these regions.
