Digital payment providers key to a cashless economy

Digital payment providers key to a cashless economy
Payment gateways have to invest for spreading merchant awareness, especially with regard to cyber security.

dubai - They must increase the number of e-shoppers, transactions and the average spend in Mena

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By Sirish Kumar

Published: Sun 7 May 2017, 7:03 PM

Last updated: Sun 7 May 2017, 9:05 PM

The UAE is a unique country attracting young entrepreneurs with its high Internet usage, smartphone and social media penetration. It is important that innovation revolves around this demographic and leverages the convergence of both smartphone and social media penetration.

Governments across various geographies such as Singapore, the UAE, India and Saudi Arabia continue to drive transactions from cash to cashless economy. In the UAE, there are many government-led cashless initiatives already in place. For instance, if you want to open a new entity in Abu Dhabi, the application process and payments are through the Internet. I believe that innovation will move beyond government entities and have an economy-led approach to demonetise cash circulation and encourage digitisation of small and medium enterprises.

The time is ripe for online payment gateways to innovate, disrupt the status quo and become a part and parcel in the lives of users.

Only a few banks control more than 60 per cent share of e-commerce transactions in India, Saudi Arabia and the UAE. Why are not other banks focused on offering these e-payment solutions to their small and medium-sized clients? They can partner with payment gateway players with full stack technology, strong risk management, anti-fraud solutions and friendly merchant dashboards.

This will create a revolution in financial inclusion and disrupt the present day's fragmented ecosystem. The partnerships will further work in the favour of small-scale merchants, the ones that have been underserved for the longest time and must be brought to mainstream attention, for the UAE economy to progress.

Preparing for cyber security
With the present emphasis on digital and cashless transactions, the online world needs to be safeguarded more than ever before. We are looking at a majority of first-time users flocking to the Internet, which makes it more vulnerable to phishing attacks, identity counterfeiting and other means of scam and manipulation.

To begin with, payment gateways need to run a thorough security check. Secondly, payment gateways have to invest and innovate for spreading merchant awareness, especially with regard to cyber security. Helping them to make secure transactions and becoming smarter against cyber attacks are key responsibilities of payment gateways.

Mobile core to strategy
Mobile commerce has been steadily growing, especially in the emerging markets of Mena, South East Asia and India. In Mena alone, the number of smartphones crossed 150 million by 2015.

The price of owning a smartphone is also getting significantly cheaper. With the smartphone wave penetrating many unbanked sections of society, these devices will deliver the first-ever Internet experience to users. Smartphone penetration has enabled multiplication in the growth of social messages. Millennials and other users will use smartphones to convert social conversations to business conversations.

Hence for retailers, it is essential that mobile phone and the Internet are at the core of their strategy. To monetise this trend, retailers will need to use the Internet for targeted marketing, using images to communicate and personalise messages to their audience.

Hence, at a time when mobile transactions are successfully opening up new opportunities for both businesses and consumers, payment gateways need to further innovate their mobile strategy.
Alternative payment methods
Payment gateway solutions have already understood how costly it is for banks to buy, deploy and manage point of sale (PoS) terminals for small stores. We saw banks in Saudi Arabia go on a major drive in 2015 and 2016 to deploy PoS terminals. We now expect to see mobile PoS solutions in the Mena region. This is evident in the recent acquisition of the Indian MPOS player MobiSwipe by the UAE company, OMA Emirates.

Payment gateways should typically work with the intention of making it easier for a heterogeneous mix of population to pay online. The introduction of alternate payment methods such as debit cards and online banking will lower costs and increase the success ratio of online transactions. Online payment gateway players, regulators and banks must treat this as a priority in 2017. In mature markets, debit cards and online banking form more than 50 per cent of online transactions.

In the Mena region, the goal should be to increase the number of e-shoppers from 89 million (in 2015), the number of transactions per e-shopper and the average spend per e-shopper beyond $313 per year (in 2015).

Payment gateways today have an opportunity of making consumers on their platform utilise the standard apps and modes of digital payments to complete transactions. They help in collecting money for housing societies, cable operators, insurance companies, travel agents, hotels and educational institutions, etc., without the exchange of a single currency note.

Different payment solutions providers may assist in further improving available technologies. Depending on the buyer's demographics and experience, s/he will like to have a choice to pay with credit cards, debit cards, banks, ATMs or wallets.

In essence, the role of payment gateways will continue to grow in leaps and bounds as the UAE economy continue to go cashless.
The writer is CEO and co-founder of Views expressed are his own and do not reflect the newspaper's policy.

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