Egypt currently leads the Arab world in terms of electronic payment services and digital wallets, with 130,000 outlets providing these services throughout the country.
The statement came as part of the Arab Monetary Fund’s (AMF) latest report, entitled “Observatory of Modern Financial Technologies in Arab Countries”. In the report, the AMF monitors the most successful models in modern financial technologies that can be scaled up and applied.
It stated that the use of digital wallets by financial technology (fintech) companies strengthens electronic payment (e-payment) methods in a number of countries. The report also noted that Egypt leads the way in terms of e-payment methods, with 15.3m digital wallets in Egypt, about 4m e-wallets in Bahrain, and a million e-wallets in Saudi Arabia.
The report said that there are currently a total of 178,000 outlets providing e-payment services across eight Arab countries, namely Bahrain, Algeria, Syria, Iraq, Lebanon, Libya, Egypt, and Morocco.
At the same time, the report highlighted the recent growth of activity in the Middle East among fintech companies operating in the electronic retail payments field.
A total of 82 fintech companies in nine Arab countries operate in electronic retail payment, with the largest number of these companies distributed across Jordan, Bahrain, Syria, Iraq, and Lebanon. About 81% of fintech companies licensed in these countries are in the field of electronic retail payment.
The AMF report also pointed out that a total of 141m electronic retail payment transactions were undertaken during 2019 in the Arab world.
The exponential increase in the size of the global e-payments market means that the worldwide electronic retail payment market now attracts a total of $3.6trn in transactions. This makes electronic retail payment services the largest field of financial technology.
Fintech company activity in a number of Arab countries has also witnessed a remarkable growth in recent years. This has been supported by a significant development recorded in the telecommunications and information technology (IT) sector. The commensurate large increase in smart phone users has also contributed to the accelerated adoption of electronic payment applications in Arab countries.
Penetration of digital payment services has been further enhanced by the supervisory authorities’ endeavour to develop payment and clearing systems. At the same time, these authorities have enacted the necessary legislation to encourage the growth of electronic payment systems, especially with regard to the adoption of electronic signature, cyber security, and data protection.
Regulations, whether at the banking sector level or at the external to sector financial service provider level, are among the most important financial infrastructure factors that have contributed to the electronic payment company activities.
Regarding frameworks incentivising financial technologies in the electronic payments field and the role of supervisory authorities, the AMF report pointed to the tendency of Arab countries, in recent years, to adopt strategies for digital transformation.
These strategies have been put in place according to comprehensive visions that include, among their goals: the availability of financial services electronically; the provision of government services through the digital payment system; and the encouragement of the role of financial technology companies. This necessitated the enactment of supportive laws, chief among them electronic payment laws, and the adoption of regulatory frameworks. With these in place, there would be an encouragement in these companies’ activities, whilst the risks that may be associated with them would be monitored.