The problem with e-payments

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What traditional payment solutions look like. 

Google ‘payment solutions Middle East’ and you’ll see tens of solutions, which can lead the unfamiliar among us to think the e-payments issue has been solved.

But it isn’t.

A large multi-million dollar corporation in the Middle East won’t have many problems when it starts accepting online payments, but for startups the options available in this region are worse than in many equivalent places around the world.

What’s wrong with e-payments today

  • Approval times to be able to accept credit card payments are too long.

The list of requirements for accepting online credit card payments keeps growing, and the approval times for cards seems be lengthening even faster.

Today, it takes about six to eight weeks for a business to start accepting e-payments with the standard payment processors in the region. If problems arise it can even take as long as six months.

  • Fees to accept credit card payments online are too high.

Just over a year ago a bank, which will remain nameless, was asking businesses to pay a $27,000 security deposit before it could start accepting credit card payments from online customers.

Thankfully, things have progressed since then and we’re seeing more providers make credit card payments available to businesses without requiring such a prohibitively high fee.

Still, between the set-up costs, monthly fees, currency conversion and settlement tariffs, entrepreneurs are looking at paying a big chunk of their transaction volume on bank charges fees.

  • Clunky technology

Fundamentally, the payments problem is one rooted in technology, not finance.

When it finally works, the technology involves redirecting your customers to the most archaic parts of the internet to complete the payment.

Add to this the fact that the integration process for most payment solutions involves a 450 page document written in heavy legalese and it becomes clear that there are some serious problems with e-payment solutions for businesses.

The solution

The solution to bad e-payments infrastructure is really quite simple: treat payments services the same way you would any startup by removing the biggest hurdles that stand between you and your merchants.

  • Fixing the harrowing approval times

This is easier said than done as the bottleneck generally lies on the bank side of the equation. It’ll take a company with scale and influence to make a real difference here, though there’s reason to be hopeful.

  • Getting rid of ridiculous fees

Slowly e-payment providers are getting better at this but there is still a big problem with hidden fees.

All the payment providers claim to have the best rates but when they’re compared in detail (including all of those hidden fees), it’s still hard to know how much it will really cost to get up and running.

  • Do a serious technology upgrade

We use payments everywhere, and the days of the redirect are numbered. Payments are a utility and they’re best completed inside apps and websites.

What we need are native APIs, state-of-the-art machine-learning fraud solutions, mobile software development kits and conversion-optimized checkout forms.

We need a great technology solution, not a good finance one.

Building a good payment solution will involve taking a bet on entrepreneurs in the region: although providing services to large merchants provide immediate returns, providing them to smaller merchants require greater up-front investments for a bet on even bigger future returns.

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