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Consolidation coming to Gulf fintech, warns $40bn unicorn VP

Remo Giovanni Abbondandolo, senior vice president for MENA at global payments processor
  • works with enterprises from Careem to Carrefour
  • Fintech firm increased payment processing in MENA by 75%
  • Next frontier in digital payments in region will be dive into crypto

Consolidation is coming to the Gulf’s fintech sector, according to Remo Giovanni Abbondandolo, senior vice president for MENA at global payments processor

The London-headquartered fintech, which offers a full-stack platform that simplifies payments processes for large global enterprise merchants, closed a $1 billion Series D funding round in January.

“In my opinion, if you’re a fintech, and you’re not profitable, it’s a challenging time at the moment,” he said in an interview with AGBI.. 

“It’s also time to reflect and look at what’s really important as to the fundamentals of the company. 

“Being profitable and having a strong balance sheet and four strong funding rounds puts Checkout in a very good position, but at same time, we remain very humble and cautious.”

The MENA payments market has grown rapidly over the past decade, to include global fintechs and tech companies, alongside incumbent banks.

Local and global giants like Network International, Stripe, Rapyd, Amazon Payment Services, Hyperpay and many others, are part of the same online battlefield.

The Middle East and Africa online payment gateway market was estimated at $3 billion in 2020, and is expected to reach $ 21 billion by 2028.

A compound annual growth rate of 28 percent has been estimated from 2020 to 2028, according to market intelligence firm RationalStat.

“Obviously where there is opportunity, the market is opening up and is attracting more players,” Abbondandolo said. 

“We are in a part of the world, which is growing very quickly when it comes to fintech and digital payments specifically. Competition here helps everybody innovate and develop new features.”

Succeeding in the region’s fragmented market

However, Abbondandolo stressed that simply establishing a fintech office in the emirate does not guarantee success in the wider region. 

“The Middle East region is also very fragmented. From a regulatory perspective, from a currency point of view, from a monetary perspective. Saudi Arabia is completely different to Kuwait, for example. 

“Bahrain and Qatar are next to each other, but also completely different. If a global player is setting up a company in the UAE and they say they are entering the Middle East, that’s not accurate.”

From a regional expansion perspective, Checkout has acquired a footprint in nine different countries across MENA including Oman, Jordan and Egypt.

“We’ve been in the region for 10 years and we are strongly present in every single country we operate in,” Abbondandolo said.

Valued at $40 billion, Checkout has sealed deals with some of the region’s largest enterprises.

Careem, Carrefour, Deliveroo, OSN, Talabat, Extra, Instashop and Vox Cinemas, as well as global names such as Netflix and Pizza Hut are its customers. 

The company also contributes to the payment stack of several fintech unicorns such as Klarna and Revolut.

Last year, it posted an almost 75 percent year-over-year increase in payment processing volumes for the MENA region last year.

In its 2021 MENA report, Checkout said approximately 83 percent of consumers said they would maintain, or increase, their current level of e-commerce spending into 2022, compared to 47 percent in 2020.

The growing popularity of digital over paper, accelerated by the Covid pandemic, has directly fed into Checkout’s success, both globally, and in the region.

e-commerce fuels the move away from cash

Cash-on-delivery (COD) was once considered the biggest obstacle to e-commerce in the UAE and wider MENA region. 

But today, even those who used to prefer the feel of hard currency in their hand are changing their mind about how they pay at the door, causing operational challenges for vendors.

“Merchants are asking me ‘how can you help me to convert people who select cash as a payment method, but then on delivery they want to change to a card?’,” Remo Giovanni Abbondandolo, senior vice president for MENA at global payments processor, told AGBI.

“This is the trend I’m hearing about from logistics companies, retailers and food platforms.”

According to a survey commissioned by Checkout, only 20 percent of consumers in the UAE currently use COD as a payment method for online purchases, in comparison to 40 percent in 2020.

Round-the-clock liquidity

Abbondandolo said the next frontier in digital payments in the region will be the dive into crypto.

In June, Checkout said it would start making round-the-clock payments to merchants in some of its markets using stablecoins, increasing access to cashflow, and significantly reducing operational complexity.

The startup will allow businesses to accept and make payments in USD Coin, a popular stablecoin pegged to the US dollar in partnership with cryptocurrency firm Fireblocks.

With a turnover of more than $50 billion, the USDC is the second largest stablecoin in the world.

Merchants will be able to make payments even on weekends and holidays, which is currently not possible with fiat currencies.

“Regional merchants in the region were already messaging me an hour after the announcement, so the interest here is extremely high. Web 3.0 companies but also legacy retailers are asking for this,” Abbondandolo said.

“If you are a crypto company or working in Web 3.0, and then you have to rely on T+3 payout, cut off time at 3pm on Friday, all these old school things cannot stick. Why can’t it be instant? And that’s the problem we’re solving right now.”

“As crypto begins to be regulated in the UAE and crypto platforms are setting up shop, we will also look to offer this solution in the UAE. We might be able to do a pilot this year in the UAE, before we launch officially to the market.”

He added: “Payment is not a static industry. Crypto is going to be in our lives more and more. In the metaverse, will you pay by card? Probably not.”

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