Investment Hot Spots and Risks in the Middle East Payments Sector

The Middle East payment sector has been developing rapidly in recent years and has become a hotspot for global investors. The following analyses the investment hotspots and potential risks in two dimensions, and provides specific case references:

I. Core investment hotspots

  1. Digital wallets explode in growth
  • Saudi Arabia's STC Pay valued at over $1.3bn, tops 8m users (25% of population)
  • UAE's Careem Pay achieves 300% YOY growth through super-app ecology
  • Middle East digital wallet transactions expected to reach $49bn by 2023 (FIS Global data)

  1. Blue Ocean Market for Cross-Border Payments
  • GCC inter-country remittances exceed $100 billion annually
  • UAE Launches 'Cross-Border Instant Payment System' (Aani) to Connect Corridors in India, Pakistan, etc.
  • Telr partners with Alipay to create Middle East-Asia commerce channel

  1. Government-led infrastructure upgrades
  • Saudi Arabia's SAMA approves 17 fintech companies to offer open banking services

II. Government-led infrastructure upgrading (continued)

  • Saudi Arabia's SAMA Open Banking Programme: It has access to data from 12 banks in 2023, driving account aggregation (AAIS) and payment initiation (PIS) services, with an estimated market size of $2.7 billion by 2025.
  • NBD UAE partners with Huawei Cloud: Build the Middle East's first cross-border blockchain trade finance platform to support real-time letter of credit settlements.
  • Egyptian Instant Payment System IPP: Users surpassed 9 million in 6 months, processing 2 million transactions per day (Central Bank data).

  1. BNPL (Buy Now Pay Later) Innovation Wave
  • Middle East BNPL market growing at 62% annually (RedSeer forecast), Saudi Tabby valued at over $600m, partner merchants include IKEA, SHEIN.
  • Federated Postpay launches 'Islamic Compliance' instalment programme, in line with the Sharia interest-free principle.

III. Key risk warnings

  1. Fragmented regulatory environment
  • Mutual recognition of financial licences in the six GCC countries remains a hurdle: e.g. a threefold difference in e-wallet capital requirements between Dubai's DFSA and Saudi Arabia's CMA.
  • Turkey has suddenly raised the local data storage threshold for foreign payment companies from 5% equity to 20% (new regulation 2023).

  1. Geopolitical volatility transmission
  • Iran's Digital Rial Project Forced to Shift to Private Chain Development Due to Sanctions; Lebanon's LBP Devaluation Leads to Remittance Losses of 40% on Remittance Platforms like OMT.

  1. The Case of the Localisation Trap