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5 Challenges for Fintech Payment Solution Businesses in the Middle East

Fintech Payments in the Middle East

What are fintech payments? Well, when we combine finance systems with technology, it’s how fintech systems work.

It involves digital wallets, stock trading, investment, funding, and cryptocurrencies, etc. Anything related to financials that goes electronically falls under the term “fintech.”

As everything is getting digitized now, the financial systems are becoming more tech-based as well.

With financial technology systems, our daily transactions are becoming cashless.

Ever heard of digital payment gateways like Paypal, Apple Pay, or Samsung Pay? You don’t have to go to them to open an account physically. You just sit in front of your screen, and your account is created anywhere in the world you are.

BUT creating Fintech payment solutions and just believing that everyone will accept them. It’s not that easy!

So what are the challenges for fintech payment solutions in the Middle East?

Today we are sharing 5 challenges that digital payment solutions will face in the Arab region.

Keep reading to find out!

State of Fintech Payments in the Middle East

The Middle East was operating on a traditional financial system for a long time. It was hard to say if the digital payment gateways would succeed here.

Most people preferred cash transactions over bank transfers and digital gateways.

Also, many people in the Middle East weren’t opting for such digital changes.

Although things started to become more flexible during the mid-2010s, as e-commerce became more popular, and later the 2019 pandemic made things easier for digital solutions.

So, the need for digital ways of transactions arose.

Yes, various factors do show us good signs for fintech payments in the Middle East.

But one has to keep market challenges in mind before making a move.

What Are the Challenges for Fintech Payment Solution Providers in the Middle East?

We have seen many improvements in the MENA region for digital payment methods. Although, there are still some factors that need to be taken care of before starting with a fintech solution.

The following are some of the current challenges for digital payments solution providers in the Middle East:

1. Making Something Better than Existing Technologies

It’s a simple marketing concept that you have to be different from your competitors. You don’t want to be like hundreds of other businesses.

According to a study, 250 fintech start-ups were expected to launch in 2020 in the MENA region.

What should a new digital payment start-up do?

Find out the loopholes in other fintech solutions. There’s always something different to work on, and one has to take advantage of it.

And that’s not the only thing. A fintech payment app needs to be user-friendly and provide quality features and functions as well.

For example, if someone makes a transaction through a digital payment system and the payment doesn’t proceed, they would stop using the software after the second or third time it happens.

So, focusing on the quality of fintech software with unique features is the key to win more people.

2. Slower Adaptation of Government Regulations

Every financial institution has to follow government rules and regulations to avoid any legal penalties.

The good thing is the Governments in the Middle East support digital payment solutions as they are faster and secure financial systems.

Gulf region policymakers and regulators began implementing forward-thinking and agile policies related to FinTech beginning in 2017. (Source: Milken Institute)

But sometimes, government regulations can hinder the innovation of a fintech system.

The reason is fintech solutions come up with new ideas and technologies quickly, but governments are more procedural and slower to adapt to them.

That’s why if some innovative idea is not allowed currently, a fintech company cannot implement them.

So, fintech solution providers need to have a communication channel with the government to implement the new ideas as soon as possible.

Regulators and Organizations Responsible for FinTech Growth in ME:

3. Maintaining the Security

People in the Middle East who are against such payment solutions are because of security concerns.

Whenever a person wants to use a fintech payment system, their most important focus is on security.

If a digital financial solution is not secure, nobody is going to use it. And, in this digital era, cyber-attacks are the most dangerous challenge for a fintech system.

A fintech system may not only lose business but will have to face legal actions as well.

That’s why a fintech payment system needs to be 100% secure and updated for its users, so people can use them without having a second thought about security and privacy issues.

4. Good Understanding of How FinTech Work

You can’t make a FinTech solution without the knowledge of knowledge and concepts required to create it.

Financial technology depends on the following expertise:

i) Artificial Intelligence and Machine Learning — For finding fraudulent activities, government compliance, money management, credit scores

ii) Data Analytics and Big Data — To collect and analyze financial activities of users and creating strategies based on them

iii) Blockchain — It helps in the encryption of sensitive information and transactions. Most cryptocurrencies operate on blockchain technology.

iv) Robotic Process Automation — RPA helps in automating the manual tasks to robots

Source: Corporatefinanceinstitute.com

Without a thorough understanding of how such technologies work, creating innovation is impossible. And, a Fintech payment solution might end up being a clone of several other competitors in a market.

5. Winning the Trust of end-users

Although digital payments are increasing in the Middle East day by day due to changes in trends in online marketplaces. Only 20% of the current transactions are in cash. 80% involve digital payment solutions, telecom fintech, bank transfer, and others.

But with so many fintech options, it’s hard to create a place for yourself. Do you want to be a part of funding solutions, telecom payments, AI investment technologies, or insurance and regulatory software?

Deciding which domain to enter is difficult but winning the customer’s trust is harder.

Here comes the need for compliance with regulatory authorities and implementation of the right marketing strategies.

That’s the final but most vital stage to start a fintech solution business.

Concluding Thoughts

Middle Eastern countries are indeed adapting to digital financial systems. But it creates challenges for current and future fintech start-ups that want to make a sustainable fintech payment solution.

The challenges like needing to create something different, the role of government, security concerns, understanding the core technologies, and winning the trust of end-users can hinder the growth of fintech payment solutions.

Looking for the best app development services for a Fintech payment app? Get in touch with Phaedra Solutions to further assist you with creating a digital payment solution.

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Phaedra Solutions

Phaedra Solutions

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Software development is the core strength of Phaedra Solutions. The company has been providing the innovative web and app development solutions since 2013.