Payments around the World - MEA

​MEA, Middle East and Africa, or sometimes referred to as MENA with a narrower coverage that spans across the Arabic-speaking countries only, is a region that has some of the wealthiest as well as the most poverty-stricken countries in the world. Today, we take a look at the payment markets of this region.

Local Payment Culture

In fact, the population of MEA is still underbanked with only 46% of them banked, while the world average is 67%. Internet and smartphone penetration are, too, factors that affect the payment landscape of a region. Both indexes of MEA are lower than world average - 47% in MEA against 62% globally (internet); and 43% in MEA against 70% globally (smartphone).

Cards are utilized in 47% of online transactions from this region, despite the fact that just 12% of the population actually has a card. This seems to indicate that there is a sizable unmet need for e-commerce, which could be satisfied by websites that provide alternatives for those without credit cards.

With an 18% share of online purchases, cash is the second most common method of payment. E-wallets account for 14% of all online purchases, bank transfers for 17%, and different local methods for the remaining 4%. Visa holds 37% of the market for cards, followed by Mastercard (29%), American Express (1%), and a variety of regional and local card programs (33%).

E-Commerce Growth Leads to the Rise of Payment Fintechs

In the MEA region, about 85% of fintech companies work in the payments, transfer, and remittance industries. Payments still dominate the MEA region, despite the presence of other fintechs in various subsectors.

The MEA's e-commerce trading volume was valued US$55 billion and had been expanding at a 30% annual rate on the eve of the pandemic. As we entered the pandemic, the average online shopper in the region spent US$371 per year. Like other markets, e-commerce in Africa has grown significantly over time. For instance, 27% of Egyptians reported doing more online shopping because of Covid lockdowns.

In the Middle East, the UAE saw a 53% surge in e-commerce volumes. A survey suggests the e-commerce market in Israel rose by 36% alone in 2020. In Saudi Arabia, 77% of consumers are shopping online more since the pandemic.

Digital payments are expected to grow at a compound annual growth rate (CAGR) of 15.39 per cent from 2022-2026 in the MENA region.

Buy Now Pay Later (BNPL) is the New Trend

79% of customers in the MENA region claim to be familiar with the idea of BNPL, and nearly half (45%) say they already feel comfortable using it. Customers desire BNPL's flexibility and convenience along with the assurance that comes from working with a reputable source like a bank or payment network.

Those who have utilized BNPL find it helpful for big-ticket purchases, as well as enhanced spending power, and emergencies. Customers also find BNPL useful for uncommon use cases, such as as a tool for financial planning and budgeting.

Digital Payments Appeal to Younger Generations More

Younger consumers have adopted more digital purchase and payment habits, and their adoption and use of new digital payment technologies is growing more quickly than that of older consumers. They continue to be concerned about security and data privacy, but it is not as acute as it is for the older generations, and they are more inclined to believe that digital technologies are secure.

Payment juggernauts like Mastercard continue to improve their digital payment capabilities in the MENA area as customers shop, bank, and transact more frequently online than ever before. Through diverse partnerships with fintechs, governments, financial institutions, digital behemoths, and telecom providers, solutions are being employed for new use cases and brought to the market.