Wednesday, May 2, 2012

Analysis of Mobile Payment in MENA

All around the globe, mobile phones have become an integral part of our 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. Another area, where mobiles have made headway in the recent past is payment. Usage of mobile devices to, transfer money or make purchases are 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.

Fig 2: 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

·         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.

Table 1: Shows the list of various companies active across various types of Mobile payment. Source:

Major Players involved in M-Payment

·         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: with the help of mobile phones, 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)  had 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 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.
Fig 3: shows figures for credit card & mobile payments. Source: Visa 2011 annual report. Values are in US $ billions.

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. 

Fig 4: 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. A large volume of remittances are 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 payment, for such workforce- given the fact that many of them do not have bank accounts. 

·         Users comfortable purchasing through mobile phone: In MENA region people are credit card shy. Cash & carry culture predominates over credit cards. Fortunately it goes off the mark, 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. 

Fig 5: shows the percentage of respondents for various countries; comfortable purchasing products on their phone. Source: Plus 7. 

Other than the above factors, 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 Mi-Pay, Mobibucks, and Gemalto etc. The given list table shows, some of the companies –

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,, Mashable, Digby, IBFS, Zawya, Wamda, DailyMenadeals, Thenextweb,  Zawya, Wamda, Insights MENA, Venture beat.
Image Source:
 Table 2: shows some of the M-payment providers in the region. Source: Zawya, Wamda


  1. Mobile Payment in the Mena region part is nicely written..:-)
    It was nice reading this..thanks for sharing and keep posting such post here in future too. i like that you have explained all with images..:-)
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