What is the story behind the company’s inception and what is your target market?
Tap Payments was built on the need to enable easy online payment acceptance in the MENA region for everyone. This has always been an unnecessarily long and complicated process in the Middle East - with lengthy setup procedures and rigid payment methods. So working closely with businesses and banking institutions, in 2014, we built a complete solution that is easy to set up, prioritises security and can be evolved to meet the unique needs of businesses of all sizes.
Before Tap came onto the scene, access to streamlined billing and payment acceptance solutions were limited to the bigger players. However, we’ve worked hard to enable small and medium sized businesses, starting with Kuwait before growing into the GCC and the rest of the MENA region, to scale their service and billing capabilities to compete with some of the largest corporations globally.
Since starting, Tap Payments has already empowered nearly 10,000 startups, professionals, and entrepreneurs across the region to pursue their biggest dreams and turn them into lucrative business ventures – from first time entrepreneurs to corporate powerhouses. We believe that everyone should have an equal opportunity to turn their ideas into reality.
What are the most important ecommerce facts and figures in the region (e.g. size of the ecommerce market, growth perspectives, internet penetration, key verticals, and key marketplaces)?
The MENA region has a population of 381 million people and from that, around 110 million people are between the ages of 15-29. This region has one of the youngest population in the world, who are at the forefront of the ecommerce trend in the region. There is also a high internet penetration and mobile adoption within the region, with around 147 million internet users and around 312 million mobile subscriptions.
These stats highlight a strong need for a business in the region to have an online presence. A business can grow 2.4 times more online than they can offline, yet this is still heavily under-exploited by businesses. Currently, only 3% of total sales in the GCC and 1.8% in the MENA region are online, even though online spending is growing at a rate of 27% per year. Moreover, cash is still king in the region, with cash on delivery accounting for the majority of payments.
What payment methods do you believe merchants should offer in order to stay relevant in the market and meet the payment needs of their customers?
Payment behaviour in the MENA region is highly fragmented with each country having their own local payment method, such as Mada in Saudi, KNET in Kuwait, Fawry in Egypt and so many more. What this means for merchants is that, in order to stay relevant, they cannot just offer acceptance of international payment methods such as Visa and Mastercard to their consumers as would be the case around the world. They also need to enable acceptance of those local payment methods to provide choices that their customers would prefer, to truly expand market reach and increase sales conversion rates.
How about cross-border ecommerce? How does Tap Payments facilitate it?
In MENA, 42% of transactions are cross-border transactions. Limiting the market of a business to just Kuwait or UAE or Saudi is far too restrictive for the merchant. Ecommerce broke the old habits of shopping locally, and opened up the regional markets to SMEs.
This can lead to an added layer of complication for the merchants, especially if they serve customers or work in multiple countries, since working with each local payment method would require a separate agreement and integration. Tap makes this a seamless process by integrating with the local payment methods so that a merchant can sign an agreement with Tap and enable the different payment methods as needed within a single API endpoint integration that is linked to the preferred bank account of the merchant.
Are there any recent regulations or government initiatives with an impact on fintech in the MENA region?
What sets the MENA region apart from a regulatory point of view is how fragmented the regulatory systems are. Standardising the regulations across 22 countries is a challenging undertaking. Most fintechs will face challenges with financial regulators as they grow regionally. However, in the recent years, governments across the region started taking a more active role in nurturing the fintech infrastructure by building ecosystems for these companies to thrive. More countries are following the lead of countries like Saudi Arabia, Bahrain, and Kuwait to enable fintechs to operate onshore and prove their models under a light regulatory framework, commonly referred to as the sandbox. Similar initiatives have started even earlier in the UAE but have been restricted to offshore operations, within free zones, limiting the access to the local market via onshore partnerships with financial institutions within the country.
Tap Payments actively participates in these initiatives across the region. We are a member of “Fintech Saudi”, founded by the Saudi Arabian Monetary Authority (SAMA) to develop the fintech ecosystem within the Kingdom of Saudi Arabia. We are also a founding member, along with the Central Bank of Bahrain, of the “Bahrain Fintech Bay”- an incubator for fintechs within the MENA region founded by the Bahrain Economic Development Board and the FinTech Consortium. Finally, we are also actively engaged in the process of developing regulations for the payment industry within the GCC and the region.