“The biggest challenge in the industry is the lack of trust, but the most valuable proposition PayPal offers is that we bring trust into the system” Ghanem
With PayPal having officially started its Egyptian operations, do you have any estimates so far of online traffic and number of users using the service in the country?
We launched two months ago, and [have] enabled the send functionality, [which allows] Egyptians to open a PayPal account, link it to any Visa, MasterCard, American Express card, and start buying online. While I [cannot] share with you numbers because we’re a public entity and don’t share numbers on a specific country, I can tell you that the early result has been amazing in terms of adoption, acceptance and in terms of volume generated. It’s extremely encouraging to see how many people reacted to it; social media has been amazing. I saw messages like: “Finally PayPal is here, now I am connected to the world”. There was this kind of emotional response, when it comes to dollars to volumes, it’s very significant.
On what basis did you decide to expand PayPal into Egypt? On what basis do you normally expand into any country?
There are three elements that encouraged us to [enter] the market: first is infrastructure, second is payment and third is supply. Infrastructure is about internet connectivity, and we need to wait until there’s enough Internet penetration and also a good quality [of connection]. Online transaction is something that requires stability of the system so you can go through your [payment] process. I believe that now in Egypt there have been serious efforts to expand availability, connectivity and stability. As for payment, online payment is linked to a card (Visa, MasterCard, etc). Now there is a good penetration of cards, especially debit cards [albeit with] lower penetration on credit cards, and it’s enough for us to start working. So there are more and more people who have electronic payment at hand. For the supply, we need to make sure that there is an ecosystem building up, i.e. buyers looking to buy online as well as sellers or merchants looking to sell their products online. We’re seeing in Egypt, as well as across all MENA, that there are more and more merchants that are opening their stores online either regionally, i.e. from the UAE or from Jordan or Saudi, and serving regionally as well as locally; a good example [in Egypt] is Jumia.com. So all these elements are important, and I believe that today Egypt is on the right track. For me, the most interesting data to confirm is that in the last five years, 17 million people have joined the internet. Guess how many users joined the Internet in the last five years in America: 18 million – almost the same. Of course the internet is way older in the US, but an emerging market like Egypt is growing very fast, and the growing number of internet users proves that there is a very big appetite for online engagement as well as online transactions in Egypt.
Are you facing any challenges in Egypt so far?
I think that the biggest challenge is awareness; [this means] making people know that PayPal is available, helping people understand what PayPal is about, and helping them understand that buying online is a good thing to do. I think the biggest challenge the online industry faces [here] is trust, or lack [thereof]. In the Middle East, it is all about the face-to-face, shaking hands, who I know and who you know. But when it comes to the internet, there’s a wall between us. [Even if the internet offers] better quality, better price and service, there’s still a concern if the merchant will deliver to my house. The biggest challenge in the industry is the lack of trust, but the most valuable proposition PayPal offers is that we bring trust into the system. PayPal is synonymous with trust.
Do governments play a role in expansion decisions?
It is very important to engage with the Central Bank and let them know that we are coming and explain our business model. That said, we are not facing any challenge with them or any regulators. They usually ask questions, we answer, and then we progress in the right direction. So [there is no] challenge; there are extremely friendly, well-connected discussions between us.
Why was PayPal service not enabled in some Arab countries?
The ecosystem was not yet available, and ecosystem isn’t only one piece; [there is more to it than just] buyers who want to go online. And then there are also countries that under sanctions by international regulations by the OFAC and others, and we don’t work in these countries. But today the large majority of MENA countries are PayPal enabled, with Egypt being the last significant market, and here we are.
Which MENA countries is PayPal enabled in?
All the Gulf Corporation Council (GCC) countries, this is UAE, which is our biggest market, Saudi Arabia which is our highest growing market, Qatar, Bahrain, Kuwait, Oman, Yemen, Jordan, Tunisia, Egypt. Other countries are on the map and will come as we develop the business.
Can you talk to us about differences in usage of the service among different MENA countries?
No, nothing specific, but what is very exciting is that Egyptians are very eager to shop online, and we love that. But the behavior is quite similar in all places where it is roughly 50:50 between physical goods and digital goods. By physical goods I mean fashion and electronics; by digital, there are [several] categories: gaming, ringtones, downloadable books and news, Facebook credit, and Skype credit. But across all verticals, I’m seeing an extremely good business building up.
What online companies have so far applied the PayPal payment method to their websites in Egypt?
None, because we haven’t enabled the merchant functionality yet, and I think this is a very important point. In the PayPal system, you have buyers and merchants. Buyers link their cards to their PayPal accounts and they can buy whatever they want. That’s what is enabled here, and what we call the “buyer” or “send” functionality. On the other side, you have merchants like Jumia, eBay, or Souq.com. Today, we have 10 million merchants around the world and zero merchants in Egypt because the functionality is not yet enabled. It’s the second phase of our plan, and it will come very soon.
Will PayPal have an Arabic interface soon?
You cannot do everything at the same time. Arabic creates another complexity as it goes from right to left as opposed to left to right, with all the accents and so on, which takes time. And [for this] we want to do not only the website but also the customer service, so that we can have the full experience in Arabic. To do that, we want to make sure that the interaction between buyer and PayPal is in Arabic online, to include e-mail and voice as well, and it takes time to get us there.
Is language a barrier in Egypt for users?
No it’s not, because the merchants are outside, so buyers are used to [shopping] in English, French or German, etc as we develop the merchant solution and the local solution. What is also important in what we have released is that today the whole PayPal system for Egyptians is not in local currency, it is in USD dollars.
Is the Person to Person (P2P) functionality enabled in MENA?
We have it, but not in MENA, because we want to focus on buying goods and services. There’s a good opportunity in buying goods and services, and there are already providers who are doing the money transfer business, the P2P and I think there are opportunities for everyone.
What are PayPal’s initial marketing strategies?
[Our strategies] are threefold; self-awareness, which we started already, is the first phase. We did not talk about the launch at the beginning; we let the market talk about it, and social media developed [the awareness] quite well. The second phase, which we are in right now, is engaging with the media [and getting the message out there]. The third phase, [which is coming soon], will [involve forming] partnerships with local banks and local partners who have a large pool of buyers [to whom they can] promote PayPal.
Is there anything you would like to add?
What we are seeing today is a big willingness from buyers here to buy online, but from overseas. What we are seeing across all the Middle East is that people are buying more from the US and Europe than locally. Why? Because the supply is not big enough. The supply is about having merchants who have the same products that we buy from the US but [produce them here]. But my main message is this: All the merchants and entrepreneurs who have an idea to take their business online do so because the buyers are here.