Are Middle East Payments Safe? An article explaining the risks and solutions

Payment security in the Middle East varies by country, technology infrastructure and regulatory environment. Here's a breakdown in terms of both risk and solution dimensions:

I. Main risk factors

1. regional disparity

   • Gulf countries (e.g., UAE, Saudi Arabia) have better payment infrastructure and high PCI DSS compliance rates; however, some conflict areas (e.g., Yemen, Syria) are significantly more at risk.
   • According to Visa 2023 data, the Middle East's credit card fraud rate averages 0.081 TP3T, which is lower than the global average (0.11 TP3T), but dispute handling mechanisms for non-card payments (e.g., local wallets) are immature.

2. technical shortcoming

   • Some small and medium-sized merchants still rely on MOTO transactions (phone/mail swipes) and lack CVV dynamic verification.
   • The Middle East Cyber Security Association reported that 43% of POS terminals in the region had not completed EMV chip upgrades in 2022.

3. Regulatory fragmentation

   • The UAE has implemented the Electronic Transactions Law requiring Strong Customer Authentication (SCA), but countries such as Iraq are still cash-dominated and online payments are poorly regulated.

4. Cultural specificity

   • COD (Cash on Delivery) accounted for as much as 651 TP3T (Statista 2023), leading to the risk of funds being retained in the logistics chain.

II. Targeted solutions

(1) Risk control on the enterprise side

• sandbox testing: Simulate local payment process vulnerabilities through sandbox environments such as the Dubai International Financial Centre (DIFC) before expanding into new markets.
• case (law): Careem Pay discovers and fixes QR code duplicate debit vulnerability via ADGM Sandbox in Abu Dhabi.

(2) Technology Adaptation

• mandatory option: Access to local acquirers such as Network International (UAE), Geidea (Saudi Arabia), whose systems have built-in delayed payment validation modules that comply with Islamic finance rules.
• Enhanced term: Deployment of AI risk control tools requires training NLP models containing Arabic variants to recognise fraudulent discourse.

(3) User education

• Design of multilingual anti-fraud tips: including slang versions of Arabic dialects (e.g. the Egyptian dialect "إحتيال" is easier to understand than the standard "غش").
• COD Optimisation Solution: Insuring Rejected Parcels - Aramex's 'COD Insurance' covers up to 80% shipment loss.

III. Compliance priority list

IV. Expert recommendations

Recommended phased implementation for companies planning to enter the Middle East market:

graph TD

    A [Phase I: Kuwait/Bahrain pilot] --> B [Access to aggregation gateways such as PayTabs]

    B --> C {Monthly average denial rate <2%?}

    C -- yes --> D [phase II: advance to Saudi Arabia]

    C --no --> E [Enhanced Address Checking API]

It is recommended to attend the GITEX Future Stars Summit every year to get the latest attack and defence cases. The DIFC Court in Dubai has now established a fast-track notarisation of digital evidence, which can compress the dispute resolution cycle from 90 days to 21 days.

V. In-depth risk dismantling and advanced solutions

1. Covert risk: payment anomalies triggered by religious holidays

• impunity: A surge of 3,00% in nightly transactions during Ramadan (Qatar Central Bank 2023 report), but a rise of 47% in fraud reporting over the same period, stemming mainly from:
  • Operational fatigue leads to lapses in manual review
  • Limited-time promotions such as "Iftar packs" have spawned fake traders
• prescription::

  # Adding Ramadan Special Parameters to the Risk Control Rules Engine
  
  def ramadan_rule(transaction).
  
      if is_ramadan and transaction.hour in [20,23]: 
  
          require_biometric = True # Force Face Recognition
  
          limit_amount = max(500, transaction.amount*0.7) # dynamically adjusts the limit downwards
  
      return decision_matrix
  
  

2. Cross-border financial flow traps

• case (law): Turkish e-commerce platform Trendyol has caused payments from Saudi users to be stopped by customs for failing to withhold the 15% digital services tax.
• Compliance tools: Automatically calculate taxes using localised solutions such as Bahrain's 'Benefit Pay', whose API is integrated:

VI. Mapping of emerging technology applications

pie 

    title Middle East anti-fraud technology adoption rate (2024)

    "Biometric Payments" :38%

    "Blockchain Clearing" :22%

    "AI Voice Nucleus (Arabic Dialect)":27%

    "Other":13%

▶️ Biometric Practice Points:

• Pupil Recognition Adaptability Test: Need to optimise IR penetration algorithms for female users wearing niqab (veil) - UAE ADIB Bank made recognition pass rate from 72% → 94% by increasing the wavelength to 850nm.

▶️ Blockchain Application Alert:

While Dubai allows cryptocurrency payments, beware:

+ Fiat currency exchange for VASP licence holders (e.g. Binance Dubai)

- NFT goods must additionally apply for a DMCC licence (cost approx. $15k)

VII. Comparative table of dispute settlement mechanisms

cash dispute	Electronic payment refusal	Cross-border complaints
sweet spot	On-site mediation by the Saudi Ministry of Commerce	DIFC Online Arbitration Tribunal	GCC Joint Consumer Protection Platform
Average time spent│45 days│12 days│90+ days│
Success rate │68% │89% │31% │

VIII. List of final recommendations

1. [Red Sea Market] Essential Allocation Portfolio:

   # Technology Stack Example (Saudi Compliance Minimum Requirements)
   
   SSL Certificate (SAMA Standard) + Tokenisation Service + SCA Exemption Interface for Tamara Installment Payments 
   
   

2. Special measures [for highly sensitive industries]:
   -Online Gambling/Adult Content:Use of Cyprus EMI transit settlement (e.g. Transact365) to circumvent Article 26 of the UAE Financial Crimes Act.

3. [Emergency filing]:
   Sign up for a Dubai Smart Police corporate account today to freeze all associated transactions in the event of a large-scale theft with a response time of <15 minutes.

For country-specific acquirer penetration test report templates or sandbox access guides, contact a specialist organisation such as Redsys Middle East for a customised audit.