In Card (On Delivery) They Trust?

We all know that trust isn’t given; it’s earned — something that’s especially true in commerce. And in Africa and the Middle East, online ordering has hit a bit of a bump in the road since online merchants have not yet earned trust from many consumers and financial institutions. For the latest mPOS Tracker, PYMNTS spoke with Islam Shawky, founder and CEO of PayMob, a company offering a card-on-delivery solution for online orders — made possible by mPOS. That, along with the latest industry news and a directory with 200-plus mPOS player profiles, awaits.

While making a purchase online may feel like a granted convenience to most modern-day consumers, finding the right method of payment isn’t always as simple as it may seem, especially outside of the U.S. and other developed countries.

In fact, in certain parts of the world, the online ordering process isn’t always quite so predictable or smooth. Consumers in countries such as Egypt and in Africa and the Middle East often face more challenging experiences when they order online from retailers.

Shoppers in those regions often put less trust in online merchants and credit card companies and feel unsure about giving out their personal payment information. According to a report from Moody’s Analytics released earlier this year, consumers in African countries registered the lowest economic impact of payments, such as credit or debit cards, and Nigeria went so far as to ban credit card use with foreign merchants in Dec. 2015.

As a result, consumers who wish to purchase items online and the merchants that are looking to build a business that serves those consumers are eager for a payment method that allows customers to feel safe when making a payment.

That’s where companies like PayMob come in. PayMob, founded in the Egyptian capital of Cairo in 2013, is a payment service provider that offers credit-card-on-delivery services to online and other delivery-based merchants throughout Africa and the Middle East via mobile payment devices.

Islam Shawky, the company’s founder and CEO, recently spoke with PYMNTS about the card-on-delivery solution and the challenges that go along with serving a customer base that is generally still wary of many modern payment methods.


An alternative to advanced credit card payments

American and other European consumers are largely moving toward a cashless society. According to an April 2014 report from the Federal Reserve Bank of San Francisco, about half of all current purchases in the U.S. for less than $50 were cashless.

The same, however, cannot be said of the consumers that Shawky and his team serve. According to a poll by Gallup, 91 percent of transactions in Africa are made in cash.

Shawky attributed this disparity to a lack of trust among African and Middle Eastern financial institutions and customers alike when it comes to new payment technologies. He pointed out that most banks in these countries largely make it impossible for consumers to use credit or debit cards to make purchases online.

“In countries like Egypt, many people do not have bank accounts or cards,” Shawky said. “Even those who do have cards, 80 or 85 percent are prepaid or debit cards, and unfortunately, most of the banks do not enable [these] cards to make purchases online.”

Similarly, even consumers who have cards that can be accepted online often do not feel comfortable entering payment information through online shopping portals.

“When we researched, we found that even people who do have cards that can be used don’t trust the website,” Shawky said. “They don’t understand that they are paying through the bank or through a card provider or payment processor. They feel like they are giving their information directly to the seller, and they do not feel comfortable doing that.”

With a card-on-delivery solution such as PayMob, however, consumers can simply present their debit, prepaid or credit card upon delivery and scan it using a mobile, handheld terminal provided by the delivery agent. This allows them to order goods online without having to deal with bank restrictions or surrender their card information to a company they may not trust.


Partnering with trusted providers

In order to ease some of those consumer fears, Shawky and his team sought out partnerships with recognized financial service providers from the region and around the world.

But at first launch, Shawky found it was harder than expected to find partners.

He and his team were barely college graduates when they first designed and began seeking partners for PayMob, and their green status gave pause to large banks in the area. However, they eventually forged a partnership with the Arab African International Bank (AAIB), one of the largest and fastest-growing banks in Egypt, to test out the card-on-delivery solution.

“They weren’t sure it was going to work at first,” Shawky recalled. “We had some challenges convincing them, but they eventually did agree to launch a pilot with us, and we found success with it.”

With the backing of a respected and trusted financial institution in AAIB, the team sought out more companies to help power the solution and give it credibility.

The company also came to an agreement with Mastercard earlier this year. Under the terms of the partnership, Mastercard will work with PayMob on the card-on-delivery service, as well as other new projects.

Shawky noted that partnerships with trusted financial institutions and service providers were a crucial part of proving that the solution was a reliable payment method to consumers.


What’s next for modern payments in the region?

While PayMob has built a solution to serve consumers who are still wary of using credit and debit cards, as well as other modern forms of payment, Shawky said he hopes payment methods in the region will soon become more advanced.

He and his team are currently working to create a new mobile wallet system intended to help do just that.

As part of the company’s partnership with Mastercard, the two companies will collaborate on a mobile wallet system for Vodafone to be used in Africa and the Middle East. Shawky said he believes the trustworthiness of partners like Mastercard and Vodafone will help the new more modern system of payments catch on in Africa and the Middle East, as it has recently in the U.S.

It seems that, for consumers who are still wary of modern payment methods, it all comes down to having trust in the payment method and the company behind it.

To download the October edition of the PYMNTS mPOS Tracker™, click the button below…


About The Tracker

The PYMNTS mPOS Tracker™ is your go-to resource for staying up to date on a month-by-month basis. The Tracker highlights the contribution of different stakeholders, including institutions and technology coming together to make this happen.