What’s the future of payments in the Middle East?

The payments industry has changed beyond recognition in recent years. Gone are the slow cash registers of yesteryear, giving way to card terminals which themselves have undergone a series of revolutions.

As technology continues to hurtle forwards, so does the way we pay for things. From contactless and mobile payments to Bitcoin and biometrics, the industry is witnessing huge leaps, with new point-of-sale units being rolled out at a rapid pace, and providers around the world finding new ways to service their customers.

And while cash remains king, these developments are driving non-cash transactions. According to the 2015 World Payments Report, the growth in non-cash transactions between 2013-2014 was 8.9 per cent, a significant increase on the previous year’s 7.6 per cent and 2011-2012’s 7.5 per cent.

The ‘emerging Asia’ and ‘central and eastern Europe, Middle East and Africa’ regions are leading the way with 27 per cent growth and 14.1 per cent growth respectively.

In the United Arab Emirates, an estimated $230bn in payments is made per year to more than 350,000 merchants and government entities. And while 70-75 per cent of total payments are still made in cash, that figure is expected to plummet in the next five years as demand for digital payment services grows.

It is a trend backed up by Ozgur Ozvardar, Middle East and North Africa vice president and general manager of multinational payments firm Verifone.

“Cash payment is still a lot more than electronic payment here in the region,” he explains in an interview with Gulf Business at the Cards and Payments exhibition in Dubai.

“We assume that around 70 per cent of transactions are still cash-based in the Gulf, which is still a very high figure, but it doesn’t create a barrier for our customers to ask for new things, new technologies.

“Traditionally the region has been seen to be behind other markets when it comes to payments, but things are changing. Our customers here don’t want to use old technology – they always want the newest thing. For example, our new ‘Engage’ (point-of-sale) terminals will be used in the UAE at the same time as the United States and Europe. Why? Because the customers are asking for it.”

Verifone, which sees 70 per cent of its business in MENA coming from the Gulf Cooperation Council, with 85 per cent of that figure coming from the UAE, was showcasing some of its latest solutions at the expo – most of which centre on the theme of ‘experience’.

“With our Engage product line we’re not only enabling our customers to accept payments, we’re also trying to create an experience,” says Ozvardar.

“While people are making their purchases, we can give them offerings so that they can consider buying more or buying something that they didn’t already have in mind. It’s the perfect time and place to make an offer – when they have their wallet in their hands and they are about to pay.”

Another new product – Carbon – engages the paying customer even more, allowing them to select products on a touch-screen as well as choosing their method of payment in a way that means they do not have to let go of their card – a tick in the box for those looking for increased security.

“People like this idea and are already investing in it. We aim to be in the market in this region by mid-2017 with this solution,” says Ozvardar.

One of the reasons for the rapid changes in payments in the Gulf, according to the vice president, is the fact that different markets are becoming increasingly better connected; exemplified by Verifone’s own growing network.

“We have 26 million terminals in the field that are globally connected,” he says.

“By connecting them, we create extra business for our customers. We are developing an application store that all of our merchants can access. It will be the same kind of concept as an app store, where they can select different applications to add to their systems and enable them to have more commerce with their client. For example, they can add a loyalty application, or non-payment applications. Our new product line is designed specifically for that.”

It is a step that builds on the recent trend of contactless payment; a trend that Ozvardar believes has changed the face of payments entirely.

He says: “About two years ago, 70 per cent of all the terminals we were shipping were non-contactless. Now 100 per cent of what we are shipping is contactless.

“Near field communication cards and NFC phones are commonplace now and every three months we have to come up with a new solution. Not only on the hardware side, but software too. That’s why we’ve developed our app store, loyalty programmes and other things that we’ve launched.

“The customer is always asking – they always want to be ahead of the competition, so we have to be ahead as well.

“If you cannot compete, if you don’t have new things in the payment sector then you can’t keep up. If you don’t innovate, you cannot keep up in the market.”

So what have customers been asking for? Ozvardar says it varies from market to market, but that nothing is off the table.

“People are asking for everything you can imagine. With a POS you can do anything. You can do loyalty, you can control subsidies, anything. In Egypt we have a fuel subsidising project and in other parts of Africa we have projects to subsidise farmers.

“Whatever the request, we can develop a solution. And customers around the world – especially in the GCC region – are always asking.”