Innovation meets common sense

Innovation used to be the key ingredient for a company's or industry's success. Today, innovation is essential simply to assure survival.
It's an exciting time to be a part of the payments industry, where there is a daily dose of innovation. Somewhere in the world, someone is creating the next big thing, making sure you can pay with a wave of the arm, a twirl of the watch winder or perhaps even by just batting your eyelashes three times.
In the payments industry, innovations range from path-breaking to gimmicky and weird.
As a payments company in the Mena region, especially with a presence across the value chain - we're at the front end with the consumer and on the back end with the merchant - innovation is a crucial component of our deliverables.
To be optimally useful, such initiatives are combined with training so that users can overcome the fear of the big bad machine. This will be a big step to migrating a cash-dominant section to cards.
Today, about 60 per cent of transactions in the UAE and 75 per cent transactions in the broader Mena region are completed in cash, in comparison with other developed economies where they tend to be between 30 and 40 per cent. A 2014 World Bank white paper estimates that 86 per cent of all adults in the Middle East are unbanked.
So, innovation in our context comes with an added ingredient: common sense. It needs to be combined with necessity, with pioneering solutions that not only address the pain points of payments at various levels but also bring into the payments universe large chunks of demographies that are not currently included.
For innovation to be inclusive and for invention to be applicable, it needs to be as relevant to the tech entrepreneur who wants to buy a coffee with a swipe of his ID card as it is to the cabbie who frets about losing a portion of his daily income to a commuter who finds himself a couple of dirhams short at the end of a journey. Mom-and-pop or small grocery stores, which run on minuscule margins, should find value for money in switching from cash to machines.
In this context, regionally-relevant organisations have the responsibility of acting as a filter for innovation to ensure that what makes it to the market is uniquely suited to the needs of stakeholders.
Case study 1: In the UAE, this means converting 8,500 Dubai cabs to point of sale (PoS) machines, or smart taxis, by December 2015. Already, some taxis are using these machines, which allow hassle-free payments via Nol cards, or debit and credit cards from around the world. Imagine not having to search for exact change while being double-parked on a busy road.
Case study 2: An initiative that hit the sweet spot with consumers has been the mobile PoS. For a year-and-a-half now, when you order even a Dh10 sandwich for home delivery from a participating establishment, chances are that they will ask if you would like to pay using cash or card. The delivery person will carry an EMV chip- and PIN-compliant terminal to swipe your card at the time of delivery. These are gaining acceptance with smaller merchants, many of whom rely on home delivery instead of investing in shop fronts, because they cost one tenth of the price of a traditional terminal.
Case study 3: Prepaid cards are another solution particularly suited to the region. In the hands of the unbanked, whether it is your son who is not old enough to qualify for a credit card, a maid shopping for grocery or a construction worker wanting to buy an air ticket online, these cards bridge the gap between the unbanked and efficient commerce.
Case study 4: Similarly, dynamic currency conversion, or DCC, introduced in 2010, is filling a vital need in a region where pretty much everyone buys an air ticket, at least once every two years and where tourist numbers are expected to hit 25 million by 2020. DCC-equipped ATM terminals reflect the withdrawal amount in the cardholder's billing currency for foreign credit cards. Allowing users to see the exact amount that will appear on their financial institution's account statement at the time of withdrawal is a big deal when you're converting dollars to dirhams to rupees while on a duty-free shopping trip.
Innovation is essential, yes, but it needs to address the specific issues of the region and needs to come with relevance built into it.
The writer is chief executive officer of Network International. Views expressed are his own and do not reflect the newspaper's policies.