Mobiles are an inseparable part of our lives. Most of us prefer to do everything on our phones, including shopping. It comes as no surprise that 73% of people used their mobiles to make online purchases in 2021. And the number is only going to continue rising because of the convenience customers get from shopping using their phones.

An integral part of this convenience is the ease and security of payments. No one will use online shopping if the checkout process is not smooth and secure. Research has found that 18% of people abandon their carts because they don’t trust the site with their card information, and 17% do it because of the lengthy checkout process.

So, the key to reducing this abandonment rate lies in making customers feel safe and streamlining the checkout process to make it shorter and smoother. And this is where the mobile payment gateway comes in.

What is a mobile payment gateway?

A mobile payment gateway is a payment gateway that enables the transfer of money from a customer’s account to the merchant’s account securely and quickly. It verifies, authorizes, and processes payments while keeping the customer’s data secured through encryption and various security protocols.

The entire process takes no more than a few seconds. However, it is a complex process. Let’s discuss how it works.

• The customer selects the product/service they want to purchase and adds it to their cart.
• From the cart, they go to the payment section.
• They select the payment option they want to use. It could be a credit card, debit card, UPI, or digital wallet.
• After selection, they are redirected to the payment gateway to add their details. For example, customers who want to pay using credit cards add their card details.

After this, the process that happens in the backend is as follows.

• The gateway sends the information to the card company, which verifies the data.
• Subsequently, the data is shared with the issuing bank, which approves or rejects the payment based on the balance available in the customer’s account.
• On successful verification, the payment gateway receives the confirmation, and the order is placed.

The process may seem complicated, but all the customer sees is the order confirmation/failure. Therefore mobile payment gateways are highly popular.

Benefits of mobile payment gateway

While e-commerce is a thriving industry, there is no lack of competitors. You need excellent products/services and a stellar customer experience to survive and succeed in this industry. And that is precisely what a payment gateway for mobile apps enables. Let us look at some of the benefits of using a mobile payment gateway.

Also Read: 7 Best Payment Gateways for eCommerce Websites in UAE

More customers

In 2022, mobile e-commerce sales contributed 72.9% of total e-commerce sales. And that ought to tell you the first and most important benefit of a mobile payment gateway. With the increasing access to smartphones worldwide, this number will continue to rise. Another study found that 57.5% of people used mobile apps for shopping because of their convenience. Therefore, a secure and easy-to-use mobile payment gateway is integral to getting more customers and retaining them.

Secured payments

Research has shown that 8 in 10 customers are concerned about their data being exposed during online shopping. Data security is the topmost concern of most customers. The e-commerce industry lost $20 billion to scams in 2021 alone. Due to built-in misuse detection features, mobile payment gateways are useful for thwarting unscrupulous transactions. Payment gateways also comply with PCI DSS, which ensures that customer data remains safe and secure.

Also Read: Tips for Safe Online Transactions

Flexibility

Today’s customers want more and more flexibility and alternatives to choose from. From options in the product to choices in payment methods, the more options, the better it is for you. Payment gateways offer several payment methods, such as recurring billing, to offer greater flexibility to your customers. They also allow you to reach people worldwide.

Other benefits of using a payment gateway include the following.

• It provides customers with the ability to shop 24*7*365
• Saves time by facilitating the payment process quickly
• Improves customer satisfaction and offers superior customer experience
• Increases sales and revenue
• Reduces the risk of being deceived

Factors to consider while choosing a mobile payment gateway

There are many mobile payment gateways in the market. And many of them provide excellent services. However, the key is to find the one that suits your needs. That is why, before choosing a mobile payment gateway, understand your needs and goals and find the answer to these questions.

Also Read: QR Codes are the Future of Mobile Payment System – Find Out Why

Who is your audience?

Not all mobile payment gateways are available worldwide. Where do your customers live? Answer that question and choose a gateway available in all those countries.

Which payment methods are used by your customers?

Check what payment methods are most used by your customers and ensure what your payment gateway offers them. However, the best thing is to choose a payment gateway with as many payment methods as possible.

Also Read: UAE Set to Become a Cashless Society with Increasing Mobile Payments

Does the payment gateway have relevant security certificates?

As mentioned before, security is at the forefront of customers’ minds. Ensure that your payment gateway has all the necessary certifications.

What is the cost of the gateway?

Each mobile payment gateway has different pricing. Typically, there’s a setup cost, a monthly fee, and a transaction fee. Check whether it fits your budget. Always read the fine print carefully and ensure there are no hidden costs.

Can the payment gateway be easily integrated into your mobile app?

Customers need an uninterrupted and smooth experience to come back to your brand. Therefore, the payment gateway must be properly integrated into your app. A good payment gateway will have an easy integration process and will not require many resources.

Is the checkout process smooth and convenient?

Test the payment gateway yourself before integrating it into your app. Check whether the checkout process is convenient and seamless.

With mobile e-commerce contributing more and more to total e-commerce sales, it has become essential for merchants to provide a smooth checkout process on their mobile apps. The above factors can help you find a good mobile payment gateway for your app.

The payment industry has undergone many changes in the last few years. It was only a few decades ago that credit cards were first used. And now, the technology has evolved to the point where seamless payments can take place in mere seconds. The latest trend is payment facilitators or PayFacs.

PayFacs enable a faster and smoother process by playing as an intermediary between merchants and payment processors. They allow their customers to accept payments quickly through credit cards.

What is a Payment Facilitator?

PayFacs are software companies that enable their customers, known as sub-merchants, to accept electronic payments. They are different from a multi-currency online payment gateway. These sub-merchants are typically merchants who sell their products/services to customers. Let’s understand how payment facilitators help streamline the payment process for sub-merchants.

Before PayFacs, merchants who wanted to accept credit card payments in their business had to open an account with a merchant acquirer. A merchant acquirer is typically a bank or a company sponsored/backed by a bank.

The problem with this process was that setting up an account was lengthy and complicated. At first glance, this might not seem like much. But the time-consuming process delayed the merchant’s ability to start their business and sell their products/services. This is where PayFacs help. They set up a master merchant account with the merchant acquirer and extend it to their customers. This enables the merchants to start accepting payments without any delay.

The payment industry recognized the benefit of offering payment facilitator services to their customers. It enabled a better customer experience and a smoother payment process and helped them increase their revenue significantly.

Parties involved in the payment facilitator process

There are many parties involved in the payment facilitator process. Let’s take a look at the primary parties involved.

Payment processors

A payment facilitator cannot do their business without the involvement of payment processors. Payment processors are responsible for processing payments that take place using cards. They authorize the payment request and share it with the card company for verification.

The payments initiated by PayFacs’ customers (sub-merchants) will have to be processed by payment processors to be completed.

Acquiring banks

Acquiring banks are the banks with whom merchants used to set up their accounts. Since payment facilitators do that in the new model, they have to agree with acquiring banks to offer their services.

The acquiring banks have a lot of responsibilities under this agreement. They monitor the PayFacs for compliance and receive and share data and money transferred during a payment transaction. That is why, to open a master merchant account, payment facilitators must ensure that they have the required technology and infrastructure to function properly and comply with all the regulations.

Also Read: Tips for Safe Online Transactions

Submerchants

The sub-merchants are usually merchants who want to start accepting electronic payments from their customers. They are the payment facilitators’ customers who want to get PayFacs’ services to begin their business quickly and securely.

Payment facilitators have several policies and rules in place while onboarding a sub-merchant. Only the sub-merchants who prove their legality and comply with mandatory regulations can use payment facilitators’ services.

Payment facilitators

Payment facilitators are software companies who acquire the necessary infrastructure and technology that enables sub-merchants to accept card payments. Their functions include underwriting and onboarding, monitoring transactions, funding their sub-merchants, and managing chargebacks.

Payment facilitator companies

Many software companies are choosing to become payment facilitators to provide a better customer experience and retain their customers. This is because, as payment facilitators, they can control a significant aspect of their customer’s experience. They can create a better customer experience and ensure customer satisfaction by enhancing their offerings. They also get to stand out from their competition with payment facilitator services.

However, franchisors are also perfect for becoming payment facilitators. You may wonder, how? It is easy to become a payment facilitator for franchisors since they already practice some control over their franchisees. They are in a unique position to put requirements on franchisees as they are already monitoring them and have even done background checks.

Let us look at some benefits franchisors will get from becoming payment facilitators.

Consolidated processing volumes

One of the major benefits of becoming payment facilitators for franchisors is that they already have several customers. All their franchisees will become their sub-merchants, and the franchisor can show their combined value. The consolidated processing volume will be much higher, resulting in negotiable processing costs. Instead of having to negotiate individually for each franchisee, franchisors can negotiate with the acquiring bank at once.

Smooth underwriting and onboarding

The payment facilitators exist to make the payment process smoother for sub-merchants. This means ensuring smooth underwriting and onboarding, monitoring their transactions, and even managing chargebacks. To achieve this, PayFacs have to take many responsibilities and risks on behalf of merchants.

Of course, they cannot take the risk without doing a thorough check on each of its sub-merchants. Franchisors are uniquely positioned as they have already conducted thorough background checks on their franchisees. Therefore, the underwriting process is simpler for them as they don’t have to do it from zero. The entire process becomes smoother, more streamlined, and more efficient.

Merchant service fees

Franchisors earn by charging service fees to their franchisees. And sometimes, they face problems in collecting this fee. As payment facilitators for all of their franchisees, franchisors assume greater control over their franchisees’ cash flow. This means that they can easily get their service fees without any delays.

It is not necessary for franchisors to straightway become payment facilitators. In case of initial hesitations, they can opt to take the white-label PayFac model. With this model, they have to lower upfront costs, and their responsibilities are not much, either.

However, payment facilitators are the future of the payment industry. The number of payment facilitators is expected to grow significantly in the coming years. And sooner or later, every industry will have to adapt to them. Franchisors have the great option to do it earlier and at fewer costs.

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The growth of mobile payments in the UAE and the rest of the Middle East has become quite noticeable in recent times. And such modes of payment are no longer popular only among the tech savvy or financially literate. They have become an important part of the general society as we know it. Digital payments have also helped SMEs (small-and-medium-enterprises) and business owners in the Middle East to expand their markets in ways never thought of before!

With online shopping on a steep rise, especially in the wake of the pandemic, eCommerce and the mobile payment industry are set to experience major growth in the coming years. Read on to know more and understand how UAE will soon evolve into a cashless society, backed by the power of mobile payments.

COVID and mobile payments

As lockdowns and movement restrictions encouraged consumers to switch to cashless payment alternatives, COVID-19 accelerated the adoption of digital payments in the Middle East.

A study conducted by Checkout.com, a London-based payments system, says the Middle East region used to be dominated by cash earlier but online shoppers have now shifted to using digital payments. This change has presented a huge growth opportunity for multi-currency online payment gateway providers like PayTabs. The report included a survey conducted on more than 5,000 consumers in Saudi Arabia, UAE, Jordan, Kuwait, Pakistan, Egypt and Qatar.

• The number of consumers who anticipate shopping online more often over the next year in those countries is 47%. 38% expect their online shopping frequency to remain the same, while only 15% expect it to decline.
• As a result of the pandemic, 40% of online shoppers say they are shopping and paying online, according to the regional manager at Checkout.com, Mo Ali Yusuf.
• “Digital payments have been on the rise for the past six years, but the pandemic fastracked the growth trajectory and condensed five years of growth into just a few months,” Yusuf said.
• The impact of COVID-19 has caused e-commerce and digital payments to surge this year, but the changes we are witnessing today go beyond a temporary shift.”
• While digital payments have become more popular in the Middle East in the last few years, cash on delivery still occupies a large portion of consumers’ wallets.
• Over the next decade, there is a great deal of potential for growth in this market, he stated.

As consumers shop online more frequently, they prefer digital payments over cash on delivery or bank transfers. 62% people who purchased something online once a month used a card or digital wallet in UAE and other countries. This is compared to the 44% who were shopping online less frequently.

UAE takes the lead in digital payments in the Middle East

UAE’s mobile payments growth has been especially noteworthy in the Middle East region. A regulatory framework and a supportive government have paved the way for the establishment of a Cashless Dubai Working Group. All digital payments in Dubai will be shifted to secure and easy-to-use cashless platforms through this group.

The Vice President, Prime Minister and Ruler of Dubai, Sheikh Mohammed Bin Rashid Al Maktoum, announced recently that the UAE Cabinet had adopted an agreement linking the payment systems of the GCC, ensuring greater integration of the region and facilitating a more significant expansion of its multilateral trade.

Compared with Europe’s annual growth of 4 to 5 per cent, consumer digital payments transactions in the UAE grew at a rate of over 9 per cent between 2014 and 2019. During 2022, digital payment volumes from SMEs grew by 44 percent, according to a report by McKinsey and Co.

There is no doubt that this adoption is having a positive impact already. As a means of promoting financial inclusion and promoting efficiency in the public and private sectors, digital payments have and continue to increase efficiency.

Business opportunities due to digital payments

The rapid growth of the mobile payments industry has presented exciting business opportunities to capitalise on. Younger generations are looking to make payments directly from their mobile phones or even smartwatches. This kind of technology has combined the convenience of online payments and the security of an app.

Smartphones account for more than 80% of all mobile devices, promoting the possibility of new inventions. The utilisation of e wallets in UAE and other Middle Eastern countries is also on the rise since they allow the user to go cashless without having to use a traditional bank account.

Sending and receiving money through apps on mobile phones has become increasingly popular. The process removes any ‘middleman’ and makes online transactions cheap or even free. Just one click and the money gets transferred. Apart from the ease of use and speed, it also prevents the need for users to carry their cards or remember an endless number of PINs.

Numerous multi-currency online payment gateways have also emerged in the UAE and they are gaining popularity in the domain with their extensive lists of digital payment solutions. But some challenges still stand in the way.

Digital future

There is still some resistance to mobile payments growth though, especially among older people who are, in general, less technologically able – but the popularity of cash transactions is likely to dip overall. Due to their convenience, ease of use, and the increasing number of businesses that digitalise and can accept such payments, digital and especially mobile-based transactions will become increasingly popular over the next few years.

There is no denying that the changes triggered by the pandemic are here to stay, and businesses will soon be expected to offer cashless options; and companies that do not do so will start falling behind their competitors.

Along with traditional debit and credit cards, QR codes and other solutions, mobile payments will play an important role in the UAE’s move towards a cashless society.

PayTabs’ role

By providing seamless B2B ecommerce solutions to SMEs, PayTabs has emerged as an early pioneer in the fintech sector. A full stack of game-changing mobile applications, hospitality, government, education, airline, travel, transportation, and biller solutions has been developed and exported by PayTabs with private Saudi investment, linking the multibillion-dollar MENA enterprise market chains together. With the launch of PayTabs SwitchOn, the real-time, integrated, turnkey platform, PayTabs has consolidated its position as a top multi-currency online payment gateway provider and global leader in end-to-end payments solutions.

In addition to its stellar fraud prevention system, PayTabs has been processing payments since 2014. Businesses have been able to process payments securely, thanks to its innovative and agile solutions. Visa and Mastercard have recognised PayTabs’ security, making it one of the most popular payment gateway providers in the UAE.

Features

• Stellar merchant dashboards
• Omnichannel payment solutions
• Simple documentation and onboarding process
• 360 payment processing

The pricing system at PayTabs is straightforward. The company offers three types of plans: start-up, growth, and enterprise. Early-stage companies will benefit from the start-up plan, which has a fixed monthly fee. Growth plans help drive sales and offer great value. Enterprise plans are for businesses looking to expand.

To conclude

Global financial systems are currently based on the growth of mobile payments. By increasing access, a wide range of benefits are unlocked. To finance their working capital requirements and grow their businesses, merchants have access to new forms of funding today. Real-time data is another advantage businesses gain when they adopt digital payments. As a result, merchants can use data-driven insights to make strategic decisions and identify emerging patterns and trends. Creating more accurate economic forecasts is also possible using the wealth of data generated by digital payments.

On the other hand, consumers benefit too, from fast, secure, convenient payment systems that offer them multiple options. They can also access innovative platforms that allow them to spread payments for goods and services out over time, such as buy-now-pay-later platforms.

So, it is a win-win for both businesses and customers in UAE and the rest of the world. Hence, transitioning to a cashless society is no longer a pipe dream.