New alternative payment methods liberate and empower communities in Africa and the Middle East
By Antiti Arponen, CEO of Pypl
In a world that seems to be moving ever faster with new ideas and inventions, there is always a danger of being left behind. It’s hard enough if you’re used to having the latest smartphones and apps that open up opportunities, provide instant answers, or offer shortcuts and easy access to purchases – but imagine how it would work if there is no bank account or credit card behind. ?
What if you were one of the hundreds of millions of people in the Middle East and Africa (MEA) in this situation – you have the phone but not the bank cards, real or virtual. Then what ?
As is often the case, just as one door may seem to close, somewhere another opens, and so it is with alternative payment systems that cater to the specific needs of the underserved and underbanked. – the 800 million smartphone users across MEA who either lack formal banking services or live in remote and isolated communities with limited access to traditional financial services.
In a region where cash has been king for far too long, new alternative payment methods – such as virtual cards, e-wallets or mobile money – act as the proverbial key to opening doors that would otherwise be closed. For example, how do consumers pay for a subscription to a streaming service, a digital education course, or even buy groceries online, without a traditional credit card?
Alternative digital payment methods will be the response to the growing needs of the underbanked in an increasingly digital economy, and to the broader shift from cash-only to cashless societies that many governments have now embraced. engaged. Countries like Bahrain, for example, are striving to achieve cashless status within the next ten years, and in Kenya, mobile cash transactions jumped by almost a third in 2021, reflecting the impact of the economic recovery and the growing adoption of cashless transactions by consumers and consumers. companies. FinTech is the right industry, at the right time to be in this geography.
With digitalization further accelerated by the onset of COVID-19, the demise of paper money in the Middle East was already advancing at a rapid pace before the onset of the global pandemic. In countries like the United Arab Emirates, for example, digital payments had been on the rise for several years, with consumer demand driving a rapid increase in online payment transactions, growing at an annual rate of more than 9% between 2014 and 2019, according to a recent McKinsey report.
While the infrastructure in MEA countries is not always fully developed, mobile money services are already connecting millions of the region’s unbanked and underbanked populations to digital financial services and, as a result, opening up other socio-economic opportunities for financially underserved communities that they would not have had access to previously.
An example of how the winds of change blowing through Africa and the Middle East demand innovative responses is the growing success of EdTech, HealthTech and e-commerce.
Health systems are benefiting from the growing role of fintech start-ups, as they facilitate payment processes and provide new avenues for accessing digital health services online. Through alternative payment methods, people are empowered to make healthcare-related digital payments – whether online or in person with a virtual card, for example – contributing to the sustainability and long-term development of the health sector.
Likewise for EdTech services – whether digital education courses, online tutorials or e-books – new virtual payment methods will enable millions of people in the MEA with smartphones and internet connections. Internet to access online education services. This digital integration into the educational system is a great force for societal change, freeing people from immobile physical structures and opening up new cultural attitudes and traditional conformist belief systems to competition and challenge.
For these reasons, the online payments industry in MEA is ripe for innovation – the region is home to two billion people and is the fastest growing in the world, with a high smartphone adoption rate. And with this increasingly tech-savvy population and an enabling environment for FinTechs to thrive, this will allow the region to lay the foundations upon which lasting socio-economic improvements can be made.
The opportunities for FinTechs to grow and develop new alternative solutions in the MEA region are exciting – and the social empowerment and benefits they will bring – are endless.