Middle East Payment Habits Revealed: A Must-Read Guide for Cross-Border Merchants

I. Overview of the Middle East Payments Market

As one of the fastest-growing regions in the world, the payments market in the Middle East has shown a unique development trajectory and consumption characteristics. According to the latest statistics, the digital payments market size in the MENA region is expected to reach $80 billion by 2025, growing at a CAGR of 15%, much higher than the global average.

This rapid growth is driven by several key factors: firstly, the region has a high proportion of young people (around 60% of the population is under 30 years of age), and these "digital natives" are more inclined to use e-payments; secondly, smartphone penetration has reached more than 75%; and, thirdly, governments have been actively promoting the construction of a cashless society. It is worth noting, however, that the degree of digitisation varies significantly from country to country - the Gulf Cooperation Council (GCC) countries generally have higher e-payment penetration rates than other Arab countries.

From a cultural perspective, Buy Now Pay Later (BNPL) services are particularly popular in the Middle East, with Forbes data showing that the UAE and Saudi Arabia have the highest percentage of BNPL users globally. This preference is closely linked to the local consumer culture that values instant gratification.

II. Detailed analysis of major countries/areas

1. Saudi Arabia

As the largest economy in the GCC (accounting for ~50% of the region's GDP), Saudi Arabia's fintech development is remarkable." The "Saudi Vision 2030" plan explicitly sets the target for the proportion of non-cash transactions at 70%, and the most popular local payment method is the Mada card system (covering 90% of residents), while international solutions such as Apple Pay are also rapidly gaining popularity. Of note STC Pay has become the first local e-wallet to receive a banking licence.

2. United Arab Emirates

Dubai and Abu Dhabi form the regional fintech hub. Credit card penetration is 80% (Visa/Mastercard dominated), but local solutions such as Payit (launched by First Abu Dhabi Bank) are growing rapidly. The "Smart Dubai" initiative is driving the city's cashlessness - more than 2,000 government services are now fully digitised.

3. Egypt

While 651 TP3T of transactions in North Africa's largest market are still done in cash, mobile wallet users have surpassed 30 million (the Meeza card + mobile wallet combination has been particularly successful). The Central Bank's InstaPay instant money transfer system has seen a 17-fold increase in average daily processing volume in two years, reflecting the strong momentum of the transition.

Other important markets

• Kuwaiti:: The KNET clearing network processes 851 TP3T of electronic transactions nationwide
• Doha: QPAY Takes Leadership Position in Mobile Payments
• Bahrain:: BenefitPay is used by 98% of the adult population.

III. Analysis of religious and cultural influences

The principles of Islamic finance have had a profound impact on the construction of local payment systems. The prohibition of interest (riba) in the Koran led to the emergence of special solutions in line with the Shariah.

1. "No Fee for Late Payment" Model: Many BNPL providers operate in compliance by charging a fixed service fee rather than interest.
2. Sukuk:Islamic bonds have been used to finance several large digital infrastructure projects.
3. Takaful Insurance: Mutual insurance products as an alternative to traditional commercial insurance mechanisms.

During Ramadan, there is a significant spike in spending (e-commerce sales typically surge by 300%), and this is where instalment options become particularly important. The golden 48 hours before and after Eid are an unmissable marketing window for cross-border merchants.

Language localisation is also critical - while English is commonly spoken in the Gulf States, providing an Arabic interface can increase conversions by as much as 40%. UI design needs to be sensitive to right-to-left reading habits and culturally sensitive colour choices (e.g. green for Islam).

IV. Trends in innovation and future projections

biometric authenticationThe rules of the game are being rewritten.

• Emirates NBD Bank has implemented iris withdrawal.
• Saudi Central Bank approves first facial recognition payment pilots .
  It is expected that 30%'s Middle East POS terminals will support biometric authentication by 2026.

Blockchain Technology Adoption Exceeds Expectations.

1. UAE launches national-level digital currency strategy (Dirham CBDC).
2. The "Blockchain Dubai" initiative has attracted over 1,000 companies to the free zone.
   3. Saudi Aramco's supply chain is fully settled by smart contracts.

New opportunities for cross-border e-commerce emerge:
Logistics Innovation: Drone delivery has been trialled for pharmaceutical shipments in Dubai; plans for Saudi Arabia's new NEOM city include an underground automated freight network.
tariff reform: GCC Harmonised Tariff Policy makes customs clearance more efficient by 60%.
Social Commerce Explodes: Instagram shopping feature reaches highest global penetration in Kuwait 32%.

McKinsey's latest report points out that "the next five years will be the golden growth period of the Middle East payment". It is recommended that enterprises going overseas focus on three directions:
① Integrated acquiring solution for GCC six countries;
② Compliance Product Design for BNPL in conjunction with Islamic Finance;
③ Seamless checkout experience development in AR/VR shopping scenarios.

Organisations that master these dynamics will gain a decisive competitive advantage in the trillion-dollar wave of the Middle East's digital economy!

V. Payment Security and Compliance Elements in the Middle East

1. Data sovereignty legislation

Countries in the Middle East have introduced strict data localisation laws in recent years:

• Saudi PDPL: Requirement that all payment data processing be done in-country
• UAE DIFC: Establishment of the world's first "fintech data free zone"
• Egypt's new rules: Cross-border transactions require pre-approval from the central bank

Organisations must deploy system architectures that are compliant with the ISO/IEEE 27701 standard, especially for biometric data storage in the 3DS 2.0 certification process.

2. AML special requirements

AML regulation in the Gulf countries exhibits three main features:
① "Ultimate Beneficial Owners" (UBO) disclosure needs to be accurate to shareholders holding 1% or more shares
② Religious donation (Zakat) channels are monitored separately.
③ Hawala's traditional remittance system is included in the regulatory framework

The case of the Dubai Gold Commodity Exchange shows that fines for failing to comply with AML regulations can be as high as TP3T in annual turnover.

VI. Operational recommendations and success stories

Localised Operations Strategy

1. Must-do items for the Saudi market::

   • Access to SADAD billing system (covering 17 million users)
   • Interest-free instalment + free gift-wrapping combo at Ramadan
   • SAMA licence applications take an average of 14 months and require advance planning

2. UAE Differentiated Programme::

graph TD.

    A[consumer] -->|preferred method| B[credit card 45%].

    A --> C [bank transfer 23%].

    A --> D[CashU eWallet 17%].

    B --> E [Visa/Mastercard dual-label card].

    C --> F [Emirates NBD real-time liquidation]

Analysis of lessons learned from failures

A European fashion brand entered Egypt with a conversion rate below the industry average of 50% due to neglecting the following details:

• Meza debit cards not supported (63% of POS transactions)
• Checkout page Arabic button loading delay of 3 seconds
• COD (Cash on Delivery) option hidden in secondary menu

VII. Infrastructure comparison table

Note: Star ratings are based on Central Bank's annual payments report.

VIII. List of expert actions

✅ GCC National Essential Qualifications Checklist:

1. SAMA/SCB/CB UAE Licence Filing Number
2. PCI DSS Level 1 Certification
3. Shariah Compliance Audit Report (when applicable to Islamic financial products)

✅ Three Principles of User Experience Optimisation.
① Reduce the number of fields to less than 5 for "One-page checkout".
② MADA/STCPay and other local solutions front-end display
③ SMS verification code automatic reading function

✅Special tips for risk control.
-Special filtering mechanisms are required for IP access from sanctioned countries such as Iran/Syria -The volume of fraudulent transactions usually rises during Ramadan 200%

Organisations that master these core points can increase their payment success rate to 821 TP3T (the regional average is 641 TP3T). It is recommended to review local regulatory updates on a quarterly basis - the new Open Banking API standard will be mandatory in Kuwait from 2024, signalling an acceleration of account interoperability across the Gulf region.