The state of tokenization in MENA

?

Key takeaways?

• Digital wallets are the fastest growing online payment method in MENA. Digital wallets also account for 18% of physical payments, forecast to rise to 33% by 2027.
• Digital wallets are very popular among young consumers. Research shows that Gen Z especially favour digital wallets for their convenience and ease-of-use.
• Tokenization is a necessary process for driving digital payment growth in MENA. This involves replacing sensitive card information with a unique digital identifier to enable secure payments and reduce fraud.

There has been a massive shift from traditional card payments to digital payments in the last few years. While this transition is happening all over the world, the MENA region is no exception: digital wallets, in particular, are booming in popularity.

In fact, digital wallets are the fastest growing online payment method in MENA, according to research from Worldpay. Digital wallet usage is driven by the fact that this mode of payment eliminates the need to carry a physical wallet, offering convenient and easy payment tracking. At the moment, just under a quarter (23%) of all e-commerce spend goes through digital wallets, while by 2027 this figure is projected to be over one-third (34%). When it comes to POS payments, digital wallets account for 18% of this transaction type and is forecast to have a 33% share of this market by 2027. With the increased availability and affordability of smartphones, Saudi Arabia has witnessed the most rapid growth in contactless payment adoption worldwide (2017-2021), boasting a 71% Android usage rate and a 28% iOS usage rate.

While Google Wallet and Apple Pay are available in some countries across the region such as UAE and Bahrain, there are a number of alternatives. Super-apps like Vodapay, stored-value wallets like M-PESA and e& money and pass-through wallets like Saudi Arabia's stc pay are all competing in this region. Digital wallets are also particularly popular among young consumers; research from SixthFactor Consulting and Amazon Payment Services shows that Gen Z especially favour digital wallets for their convenience and ease-of-use.

?

The role of tokenization in digital wallets

A secure and seamless user experience is vital for digital wallets, and this can't happen without tokenization. In order to digitize cards for use in a wallet, tokenization is a mandatory requirement. The process involves replacing sensitive card information with a unique digital identifier or token to enable the payments without revealing the card data.

One of the biggest advantages of tokenization is that the token is only valid in a very fixed set of circumstances. Whether it's linked to the mobile device itself, or used for a particular merchant, a token cannot be used outside of that context. This increases payment security and lowers the risk of fraud.

Thanks to the Secure Remote Commerce (SRC) framework, tokenization is not just useful for securing POS payments, but can greatly simplify e-commerce payments too. ?

By using tokens for online and in-app payments, security is improved without compromising the user experience. Consumers get a smooth and harmonised checkout process, while merchants will have fewer abandoned shopping carts while increasing transaction security?

?

How to get started with tokenization

If you want to find out more about what tokenization is and how it works, how it has evolved, and how it can enable new business models for financial institutions and other organisations, download MeaWallet's guide to tokenization. ?

If your organisation wants to enable OEM wallets such as Apple Pay, Google Pay, Samsung Pay, or issuer-branded wallets, as well as tokenized eCommerce transactions using Secure Remote Commerce (SRC) on web, mobile, and wearable devices, then MeaWallet has a solution for you.

The Mea Token Platform will enable you to connect to all Token Service Providers (such as Amex, Visa, and Mastercard) through a single integration. MeaWallet is responsible for keeping the platform up-to-date with all regulatory and payment scheme changes, meaning there's no maintenance for you to deal with. The Mea Token Platform is also PCI-DSS certified so you can be certain that it is completely secure.

?

If you’d like to work with MeaWallet on your tokenization project, get in touch today.