Why Cash Is No Longer King In The Country Of Jordan

Middle East startup business

Digital commerce was undeniably progressing in the Middle East and North Africa (MENA) in the pre-COVID world – particularly in Jordan, CEO Imad Aloyoun of Jordanian payments platform Dinarak told PYMNTS in a recent conversation. But Aloyoun said it was happening unevenly. Women, refugees, the poor and the young had historically had low inclusion in Jordan’s banking system because there’s no good onboarding process for them – but mobile-phone penetration runs deep across Jordanian society, even among critically underbanked segments.

“That presents a really perfect opportunity,” Aloyoun said. Or at least it presents the start of one, as it pushed Jordan’s central bank to develop JoMoPay, the nation’s national mobile payment system.

Designed as part of the central bank’s national financial-inclusion strategy, JoMoPay provides the regulatory framework under which Dinarak operates. The system also allows for interoperability across the various payment service providers emerging in the Jordanian landscape.

Aloyoun said JoMoPay has created the infrastructure necessary to allow more Jordanians to actively participate in the country’s financial and commerce systems. But he said it took COVID-19 to provide the impetus for consumers and businesses to significantly adopt digital payments — and set the stage for a reimagined commerce future in Jordan specifically and MENA in general.

An Overnight Change

Aloyoun said Jordanian consumers had been avid participants in international eCommerce before COVID-19. But he said that eased off as the pandemic hit and consumers began thinking much more locally when it came to transacting digitally.

But moving to local digital commerce represented something of a cultural shift for the country. “Jordan is a cash culture,” Aloyoun said. “People believe that cash is king.”

That was particularly true when it came to paying for goods locally. Even if consumers ordered goods online, their preference was to pay in cash upon delivery, Aloyoun said.

But the pandemic, the resulting shop closures and concerns about handling “dirty” cash pushed many consumers to reconsider that, and Dinarak’s mobile-wallet app has gone from roughly 300,000 customers before COVID-19 to more than 1 million today.

“Unfortunately, it took a pandemic for this mass adoption to happen,” Aloyoun said. “However, something good came out of this, and I think this will have lasting effects that are really positive and empowering on a socioeconomic level regarding digital payment in general.”

He said the ability to pay and be paid digitally opens up doors in Jordan that had hitherto been closed to both consumers and entrepreneurs. Aloyoun said the nation’s best asset remains its human capital, but he’s seen many entrepreneurs fail with businesses that would have been successful but for the nation’s lacking financial infrastructure.

However, Aloyoun said mobile banking is finally helping put that infrastructure in place as COVID-19 changes the requirements of both consumers and sellers.

Building Better Payments And Banking Services 

When Jordanians are shopping for fresh foods, they’re less likely to head off to massive supermarkets than to hit local specialty shops every few days to grab fruits, veggies and grains.

Aloyoun said that until very recently, one was certain to need cash for those stores — but not any more, at least not where merchants have embraced QR codes.

He said Dinarak started promoting QR codes systems to merchants about two months ago, and almost 90 percent of merchants who’ve signed up are “really small shops — small produce shops, grocery stores [or] barber shops. That is our target segment from a merchant point of view.”

But Aloyoun said the question isn’t so much what Dinarak can do today with such systems, but what it can build out in the future. He said dynamic QR codes are part of that road map, as is the development of additional banking services like micro-credit, insurance options and savings accounts.

Aloyoun said one area of particular interest for his firm is developing a marketplace of goods and services within its app. That would make it easier for consumers and merchants not only to transact, but would also give them a place to find each other and interact.

He said the goal is to develop the Dinarak platform so that it robustly offers consumers who’ve heretofore been excluded from the digitized world an easy and versatile access point from which to manage both their financial and commercial lives.