Adoption of a broader range of digital payment methods is accelerating in the MENA region and the technology fueling the future of payments is already here, according to Mastercard’s New Payments Index 2022. In addition to being aware of solutions like digital cards, biometric payments, BNPL (Buy Now Pay Later) and open banking, consumers in MENA are increasingly and actively using these solutions in their everyday lives.
Mastercard’s New Payments Index 2022 found that 85% of people in MENA have used at least one emerging payment method in the last year, including tappable smartphone mobile wallets, BNPL, biometrics, and payment-enabled wearable tech devices. Consumers are also making purchases in increasingly diverse ways, including through voice assistants and social media apps.
Usage of digital payments increasing, use of cash declining
While traditional payment methods still have traction, one in five (19%) consumers in MENA indicated they used less cash in the past year. By contrast, 64% of MENA users (compared to 61% globally) increased their use of at least one digital payment method in the last year, including digital cards, SMS payments, digital money transfer apps and instant payment services. These behaviors are expected to continue, with comfort and security key to growing adoption.
The Index confirmed security is top of mind when deciding what payment methods to use, globally and in the MENA region (41%). Other considerations are ease of use, rewards and promotions. Highlighting sustainability as a key driver in the region, 31% of MENA consumers said they also consider social and environmental benefits.
The Mastercard New Payments Index 2022 further shows:
High awareness of Buy Now, Pay Later (BNPL) Installments as a budgeting tool
The majority of MENA consumers have heard of BNPL with 79% saying they are familiar with the concept, and almost half (45%) are already comfortable using it today. Consumers want the flexibility and convenience of BNPL, but with the sense of security associated with a trusted provider like a bank or payment network.
Those that have used BNPL find it useful for emergency and big-ticket purchases, as well as increased purchasing power. Consumers also find BNPL useful for unique use cases, including as a budgeting and financial planning tool.
Receptiveness to more direct Account-to-Account (A2A) payments
The majority of consumers are seeking greater agility to optimize bill payments, prioritizing control, flexibility, convenience, and integrated payment technologies. Most consumers are open to direct account-to-account payment options, by linking their account to a merchant site for future purchases. 81% of MENA consumers using account-to-account payments have maintained or increased their usage in the last year.
Two thirds (68%) agree they are interested in a bill payment option that allows them to change the date they pay their monthly bills, mostly due to an irregular income. Bill payment options that allow them to pay over a period using a buy now, pay later solution (67%) was also of interest, as well as automatic payments for their household bills (68%).
Consumers turning to fintech, and indirectly open banking, to accomplish everyday finance needs
Consumers are relying on digital finance options for their everyday financial tasks, with the benefits of open banking like speed, convenience, and transparency. About three quarters (73%) know about open banking, and are using it to pay their bills, do their banking, secure or refinance loans, and make BNPL payments.
Six in ten (59%) MENA consumers feel safe using apps to send money to people or businesses from their phone. Four in ten are willing to share financial data information with apps to have access to payment tools that help them manage their money.
Biometrics offer convenience and security at checkout, though data access concerns remain
Consumers recognize the convenience that biometrics can offer, with 64% agreeing it is easier to make payments using biometrics than a card or device. The potential for security optimization is also evident to consumers, with two thirds agreeing biometrics tech for payments is more secure than two factor authentication.
While consumers do have some concerns about what entities have access to their biometric data, they are still open to using it given the time it saves, and nearly two thirds (62%) have used biometrics for at least one purchase in the last year. Five in six (84%) consumers have used or plan to use their fingerprint to make a payment, which was followed by other biometric methods like facial recognition, palm or hand, retina scans, and voice recognition.
Emerging payments have strongest traction among more digitally native generations
Younger generations have gone more digital in their purchasing and payments behavior, and their engagement in and usage of emerging digital payments engagement is accelerating at a faster rate than older audiences. While security and data privacy remain a concern for them, it is less heightened than for older audiences, and they are more likely to perceive digital tools as secure.
Across the MENA region, Gen Z is less likely than Millennials or Gen X to use cash or make in-person purchases and payments. They are proactively seeking out new digital payment alternatives, for example a click-to-pay account.
As consumers shop, bank and transact digitally more than ever before, Mastercard continues to strengthen its digital payment capabilities in the MENA region. Its trusted technology solutions are being used for new use cases, brought to market through various partnerships with fintechs, governments, financial institutions, digital giants and telecom operators. By tapping into multi-rail capabilities to create competitive localized solutions, Mastercard is accelerating the transfer of value in new ways, on multiple rails, thereby advancing a bright future for inclusive commerce.