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State of Payments

Welcome to the State of Payments 2015 by Payfort. This is our annual report on the world of payments, ecommerce and innovation in the Arab World.

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Market Size

"Ecommerce is the fastest growing sector covered in this report and by 2020 it will be nipping on the heels of airlines to become the biggest. By then we predict UAE and KSA will have a combined ecommerce market of over $10 billion."

$7

BILLION
All
UAE
KSA
Egypt
Kuwait
Lebanon
Jordan

Seasonality

"Ecommerce is feast or famine with lulls from January through to August when fortunes turn in the run up to November and December. Sales soar before Christmas and the New Year."

Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
Oct
Nov
Dec
Transaction Size
Transaction Volume
Transaction Size
Transaction Volume

Transaction Ratios

"Acceptance ratios are low for ecommerce companies. This owes to the many startups in this space that are still developing effective checkout pages on their websites."

Ecommerce Ratio

Industry Survey *

What is most important to you when it comes to online payments?

"Ecommerce companies are focused on increasing the number of transactions with the aim of capturing market share. In the future they will have to focus on increasing their average order value."

Acceptance Ratio

Chargeback Ratio

Transaction Volume

Transaction Size

What is a major online payment challenge?

"Cash on delivery can be crippling for small ecommerce companies due to the costs and high return rates. Many firms are struggling to get to grips with this local challenge."

13%
16%
26%
13%
32%
FRAUD
ACCEPTANCE RATIO
COD ALTERNATIVE
PAYMENT OPTIONS
TRUST ON CHECKOUT

Which social media channel will be your biggest focus for online sales and consumer engagement?

"Facebook is far and away the most important channel for ecommerce companies while Instagram has outstripped Twitter as the runner up. In 2016, Instagram may well take pole position."

41%
13%
4%
4%
9%
23%
5%

How important are alternative payments and easy installment plans to your business?

"Alternative payments are incredibly important in ecommerce as consumers refuse to pay online for physical goods. Ecommerce companies are also starting to tinker with easy installment plans."

61%
24%
10%
5%
Very important
Important
Somewhat important
Not important at all
Alternative Payments
Easy Installments

Which of marketing channels provide the biggest boost to e-commerce sales?

"Ecommerce companies are not heavily reliant upon paid media and instead focus on SEO, social and email marketing to increase market share."

Ecommerce Marketing Channel

Which product categories do you sell?

"Entertainment and electronics are the largest ecommerce sectors. Groceries is a small sub-sector, however, it could explode if major players make it a focus."

Ecommerce Product Categories

What percentage of your customers pay with credit cards/mobiles and do you attract return customers?

"Ecommerce companies still haven’t cracked credit card payments and m-commerce – the winners in the run-up to 2020 will be brands that successfully confront these challenges while building brand loyalty."

50%
40%
30%
20%
10%
0%
100 - 90%
89 - 75%
74 - 50%
49 - 25%
24 - 0%
No Mobile Sales
Credit cards
Mobile sales
Repeat Buyers

What is your biggest challenge?

"Ecommerce is intensely competitive and each niche is filled by multiple providers. This means that acquiring market share is the most important consideration for the vast majority of firms."

Ecommerce Biggest Challenge

What is the most significant factor for clothing returns?

"Incorrect sizing is the most common reason for clothing returns. This may indicate that customers are unable to correctly size themselves when shopping online."

Ecommerce Clothing Returns

Do you see subscription e-commerce fashion as a viable business model? And are retail brands a threat to ecommerce companies?

"Subscription ecommerce is clearly an intriguing prospect that could help boost brand loyalty in this competitive market. Interestingly, ecommerce companies are not threatened by retail brands that may move into the online world."

0%
20%
40%
60%
80%
100%
63%
26%
Subscription Ecommerce
Retail Brands

Yes
No

Which of the following poses the biggest challenge for you as an Ecommerce?

"Maintaining the same level of service between offline and online stores has proven to be the most challenging aspect for many Ecommerces. Companies that can innovate in this area stand to gain a big advantage over competitors."

Ecommerce Major Challenges

Do you currently engage in omni-commerce for your business and do you plan on making your online store a bigger focus in 2015? Will online shopping overtake retail shopping by 2020?

"Ecommerce businesses are split equally on the takeover of online shopping with 50% expecting it to take over retail shopping by 2020. Still there is overwhelming agreement that in 2015 online needs to be a bigger focus."

Yes
no
Online Shopping overtaking retail shopping by 2020
Engage in omni-commerce for your business
Online store a bigger
focus in 2015

Which of the following would you say is a major factor for returns from Cash-on-Delivery?

"Logistics is clearly the largest issue affecting Cash-on-Delivery returns. The time between purchase and payment leads customers to change their mind and abandon the sale."

Ecommerce COD Returns

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Market Size

"Entertainment and Events is still a relatively small market in the Middle East and we predict 2020 revenues top out at $200 million. Growth is driven by the UAE which is the hub for concerts and cultural events in the region."

$125

MILLION
All
UAE
KSA
Egypt
Kuwait
Lebanon
Jordan

Seasonality

"Seasonality is a strong force in this sector with pronounced lows during what has been Ramadan and significant surges in September and October when event season starts in the region. As Ramadan moves forward into spring we expect to see transaction volume drop."

Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
Oct
Nov
Dec
Transaction Size
Transaction Volume
Transaction Size
Transaction Volume

Transaction Ratios

"Entertainment and Events has the lowest acceptance ratio of any vertical in this report because many transactions take place offline. Merchants need to develop modern, responsive websites and mobile apps to significantly modernize their online presence."

0
100
80
60
40
20
0
Acceptance
Refund
Chargeback

Industry Survey *

What is the most important to you when it comes to online payments?

"In this sector merchants are focused upon increasing the volume of transactions and eliminating chargebacks. In contrast, no respondents saw the actual size of transactions as the most important element. "

What is a major online payment challenge?

"Merchants in this sector are looking for ways to provide consumers with diverse options for making payments. Acceptance ratios are a secondary concern despite poor performance across the vertical."

17%
25%
0%
42%
17%
FRAUD
ACCEPTANCE RATIO
COD ALTERNATIVE
PAYMENT OPTIONS
TRUST ON CHECKOUT

Which social media channel will be your biggest focus for online sales and consumer engagement?

"Facebook and Twitter are the networks of choice for marketers in events and entertainment, however, Instagram is becoming a more important channel for driving engagement and sales."

31%
linkedin
google+
pinterest
instagram
more

How important are alternative payments and easy installment plans to your business?

"Alternative payments are incredibly important to events and entertainment companies as they struggle to gain trust from consumers online. Easy installment plans on the other hand are low priority due to the small basket size of most tickets."

0%
0%
0%
0%
Very important
Somewhat important
Important
Not important at all
Alternative Payments
Easy Installments

What marketing channels provide the biggest boost to online ticket sales?

"The industry is heavily reliant on paid search which provides the fastest route to brand visibility and conversions. Marketers in events and entertainment were much more focused on PPC than their counterparts in other verticals."

SEO
Paid Search
Content Marketing
Affiliates
Online PR
Email Marketing
User Reviews
Social Media
Referrals
Offline Channels

What percentage of your customers pay with credit cards or via mobiles?

"Mobile transactions are limited in events and entertainment and one third of respondents have mobile transaction rates of less than 25%. Credit card payments are also clearly a major challenge."

100%
80%
60%
40%
20%
0%
100 - 90%
89 - 75%
74 - 50%
49 - 25%
24 - 0%
Credit cards
Mobile sales

How do you deliver tickets to your customers?

"The industry relies heavily on email, mobile and print to deliver tickets. Interestingly print and mobile have carved out a slight edge over email."

Ticket Deliver

What are your major challenges?

"Ticket cancelations are overwhelmingly regarded as the biggest challenge across the events and entertainment section."

Major Challenge

To Top

Seasonality

"Marketplace Services has less seasonality than other sectors as demand tends to be consistent. January and February are the low season as consumers tighten their belts after the New Year and have fewer days to transact during February."

Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
Oct
Nov
Dec
Transaction Size
Transaction Volume
Transaction Size
Transaction Volume

Transaction Ratios

"This sector has very healthy acceptance, chargeback and refund ratios indicating that companies have excellent ecommerce teams and systems in place."

Marketplace Ratio

Industry Survey *

What is the most important to you when it comes to online payments?

"Acceptance ratios are incredibly important for companies in this sector while the actual size of transactions seems to be a secondary priority."

60%
Acceptance Ratio
15%
Chargeback Ratio
25%
Transaction Volume
0%
Transaction Size

What is a major online payment challenge?

"Cash on delivery and increasing trust on checkout are the most significant challenges for firms in this sector. Thankfully, fraud is not a major concern."

15%
13%
28%
17%
28%
FRAUD
ACCEPTANCE RATIO
COD ALTERNATIVE
PAYMENT OPTIONS
TRUST ON CHECKOUT

How important are alternative payments and easy installment plans to your business?

"Alternative payments are an area of focus for service companies. Easy installment plans on the other hand are less important and companies are still figuring out whether they are applicable to their businesses."

Very important
Important
Somewhat important
Not important at all
Alternative Payments
Easy Installments

Which social media channel will be your biggest focus for online sales and consumer engagement?

"Facebook and Twitter continue to be a major focus for the Service industry, however, LinkedIn and Google+ are gaining popularity as the allow access to professional networks."

38%
24%
14%
4%
2%
14%
4%

Which marketing channels provide the biggest boost to e-commerce sales?

"Search engine optimization is crucial for services companies that rely upon traffic via long tail keywords to generate brand visibility and conversions. Referrals are also very important for companies in this sector."

Marketing Channels

Where do you plan to invest in the run-up to 2020?

"Marketplace service companies are intent on building apps. As we move towards m-commerce acceptance this is absolutely crucial for small and large firms alike."

Investment 2020

What percentage of your customers pay with credit cards/mobiles and do you attract return customers?

"Mobile sales and credit card purchases are incredibly important for this sector, yet a large amount of transactions still happen through desktops and offline payment methods."

100 - 90%
89 - 75%
74 - 50%
49 - 25%
24 - 0%
No Mobile Sales
Credit cards
Mobile sales
Repeat Buyers

Which type of users are the most difficult to acquire?

"Most service companies agree that buyers are the most difficult user type to acquire."

100%
80%
60%
40%
20%
0%
67%
19%
14%
Buyer
Seller
Both

Which product categories do you sell?

"Most service companies do not provide physical goods alongside their main revenue stream. Diversification into this area may be an area of opportunity in the future."


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Market Size

"In 2020 the Travel and Tourism sector in ecommerce alone will pass $5 billion. Growth will be relatively even across the Arab World, however, Kuwait and KSA will see their markets expand at slightly faster rates."

$3.6

BILLION
All
UAE
KSA
Egypt
Kuwait
Lebanon
Jordan

Seasonality

"The vast majority of transactions occur in the months from August to December, however, there is also a short surge in bookings in the month before Ramadan as people set their plans to travel to cooler climates."

 
Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
Oct
Nov
Dec
Transaction Size
Transaction Volume
Transaction Size
Transaction Volume

Transaction Ratios

"Travel and tourism has the highest ratio of chargebacks of any sector surveyed in this report. OTAs must ensure they guard closely against fraud as they set up their online payment gateways."

Industry Survey *

What is the most important to you when it comes to online payments?

"Travel and tourism companies are focused upon transaction volume due to large seasonal lulls. Acceptance ratios are also a major concern."

35%
Acceptance Ratio
0%
Chargeback Ratio
41%
Transaction Volume
24%
Transaction Size

What is a major online payment challenge?

"Fraud is the largest challenge that faces companies in travel and tourism. This aligns with the high chargeback ratios experienced across the sector."

FRAUD
ACCEPTANCE RATIO
COD ALTERNATIVE
PAYMENT OPTIONS
TRUST ON CHECKOUT

Which social media channel will be your biggest focus for online sales and consumer engagement?

"Facebook is the most important channel for marketers in travel and tourism. LinkedIn is a surprise entry and 15% of companies use it to drive sales and engagement."

30%
linkedin
google+
pinterest
instagram
more

How important are alternative payments/easy installment plans to your business?

"Easy installment plans have found a home in travel and tourism as customers are starting to spread their holiday splurges out over the calendar year. Luxury travel providers are set to make great use of this tool in 2015/2016."

0%
0%
0%
0%
Very important
Important
Somewhat important
Not important at all
Alternative Payments
Easy Installments

What marketing channels provide the biggest boost to online ticket sales?

"User reviews are incredibly important in travel and tourism. Engines such as TripAdvisor have empowered customers and brands are learning to deal with that new reality."

40
30
20
10
0
SEO
Paid Search
Content Marketing
Affiliates
Online PR
Email Marketing
User Reviews
Social Media
Referrals
Offline Channels

Do you offer online bookings and will mobile become dominant by 2020?

"100% of companies surveyed offered online bookings and the vast majority expect mobile to become dominant by 2020. We are increasingly living in an app centric world."

100%
0%
Online Booking
Mobile Booking
Yes
No

What distribution channel is currently your main focus for bookings and what do you expect your future focus to be?

"Currently OTAs are focused on selling through the web, however, in the future some companies will shift that focus to m-commerce. Offline sales are also likely to be less important in the future."

100%
80%
60%
40%
20%
0%
Offline Sales
Website
Mobile
Social Media
PAX Bookings 2014
PAX Bookings 2015

What percentage of your sales come from mobile?

"56% of OTAs still don’t sell through mobile. This number will change significantly as companies are forced to invest in apps and m-commerce over the coming years."

100
80
60
40
20
0
100 - 90%
89 - 75%
74 - 50%
49 - 25%
24 - 0%
No Mobile Sales

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Market Size

"Online ticket purchases for airlines will emerge as a major source of revenue. The Arab World is turning into a travel hub and if growth continues towards 2020 it will become an enormous industry."

$11
BILLION
All
UAE
KSA
Egypt
Kuwait
Lebanon
Jordan

Seasonality

"The hot summer months are high season for the airline industry with June representing the peak in transactions and volume. This owes to the confluence of Ramadan and the hottest months last year and we can expect high season to move forward along with the Holy Month."

 
Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
Oct
Nov
Dec
Transaction Size
Transaction Volume
Transaction Size
Transaction Volume

Transaction Ratios

"The airlines industry has a sterling acceptance ratio of 82%. The industry is populated with established players who can invest significantly in ecommerce and strong payment gateways."

Ratios
Percentage
ACCEPTANCE 82%
REFUND 0.99%
CHARGEBACK 0.03%

Industry Survey *

What is most important to you when it comes to online payments?

"Airlines are focused on increasing their ratio of successful payments. This has clearly paid dividends with the acceptance ratio already at 82%."

50%
Acceptance Ratio
10%
Chargeback Ratio
20%
Transaction Volume
20%
Transaction Size

What is a major online payment challenge?

"Acceptance ratio is still seen as a major challenge. In instances where payment fails it’s quite likely that consumers will move to different providers in this highly competitive market."

FRAUD
ACCEPTANCE RATIO
COD ALTERNATIVE
PAYMENT OPTIONS
TRUST ON CHECKOUT

Which social media channel will be your biggest focus for online sales and consumer engagement?

"Facebook is still king for airlines with Twitter and Instagram taking second and third prize respectively. Google+ is drawing zero interest from marketers in this space."

39%
linkedin
google+
pinterest
instagram
more

How important are alternative payments and easy installment plans to your business?

"Airlines have recognized the importance of easy installment plans. As air tickets can be very expensive it makes sense for consumers to spread those repayments out over a period of months."

50%
30%
10%
10%
Very important
Important
Somewhat important
Not important at all
Alternative Payments
Easy Installments

What marketing channels provide the biggest boost to online ticket sales?

"Email marketing, SEO and social media are crucial marketing channels for airlines. SEO in particular is of great importance as organic traffic is the lifeblood of many airlines in the Arab World."

40
30
20
10
0
SEO
Paid Search
Content Marketing
Affiliates
Online PR
Email Marketing
User Reviews
Social Media
Referrals
Offline Channels

Do you see wearables, mobile purchases and onboard purchases important for the airline industry?

"Airlines are heavily focused on mobile purchases and mobile wallets, however, they are still figuring out what to do with wearables."

100%
0%
Mobile Booking
On-board Purchases
Wearables
Yes
No

Which online distribution channel is most valuable for bookings and what will you focus on in 2015.

"Airlines see owned properties (website and social media) as the most important channels for bookings, however, they are looking to invest in mobile in 2015."

0%
10%
20%
30%
40%
50%
Your Website
OTA Platforms
Mobile
Social Media
PAX Bookings 2014
PAX Bookings 2015

What percentage of your sales come from mobile?

"Shockingly four out of eleven airlines said that 90%+ of their sales come from mobile. The rest of the field is slower in adoption with mobile purchase ratios varying considerably."

90 - 100%
75 - 89%
50 - 74%
25 - 49%
0 - 24%
No Mobile Sales

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Population

"The Arab World is dominated by the major population centers of Saudi Arabia and Egypt. These two markets present the greatest opportunities for ecommerce, however, both present regional challenges that inhibit growth."

9.3m
28.8m
82.1m
3.4m
4.5m
6.5m

Internet Users

"Egypt is the largest internet market followed by Saudi Arabia. UAE has a large, mature internet population and a relatively high rate of internet penetration. These three markets will drive change in the Arab World’s ecommerce industry."

8.2m
17.4m
40.7m
2.6m
3.2m
2.9m
UAE
KSA
Egypt
Kuwait
Lebanon
Jordan

Online Buyers

"Egypt has the most online buyers of any country in the Arab World. However, by proportion of the population, the UAE and Kuwait have more online buyers and are easier for ecommerce companies to penetrate."

Online Buying by Genders

"Women continue to buy very little online. The lone exception to this rule is UAE where inclusion in the online economy is approaching parity. In the run-up to 2020, it should be a focus of Arab governments to extend the benefits of the digital world to the entire population."

Age Groups Buying Online

"26-35 year olds are the largest ecommerce market in the Arab World and brands must appeal to them in order to succeed. Firms in Saudi Arabia must also target the 18-25 bracket as this accounts for a quarter of the market share."

10%
43%
20%
19%
8%
25%
46%
14%
10%
5%
15%
50%
13%
13%
9%
8%
42%
15%
20%
15%
16%
34%
17%
21%
12%
18%
42%
16%
15%
9%
UAE
KSA
Egypt
Kuwait
Lebanon
Jordan
18-25
26-35
36-40
41-50
51+

Online Buying Categories

"Consumers in different Arab countries have very divergent purchasing behavior online. Airline tickets, hotel reservations and electronics tend to be the most readily adopted categories, however, the degree to which people buy those products online varies considerably."

All
UAE
KSA
Egypt
Kuwait
Lebanon
Jordan

Payment Methods

"Cash is still the preferred method of payment for ecommerce goods, especially in Egypt where 72% of consumers use cash."

39%
26%
22%
36%
38%
26%
51%
59%
72%
41%
53%
60%
2%
4%
2%
1%
1%
2%
5%
6%
1%
2%
2%
5%
3%
5%
3%
20%
6%
7%
Credit or Debit Card
Cash
Cashu
PayPal
Others
UAE
KSA
Egypt
Kuwait
Lebanon
Jordan

Income Levels

"The spread of income distribution is consistent across Kuwait, UAE, Saudi Arabia and to an extent Lebanon. Egypt and Jordan on the other hand have a larger proportion of consumers towards the lower end of the income spectrum."

All
UAE
KSA
Egypt
Kuwait
Lebanon
Jordan