Can a new payment gateway finally make it easy to transact online?
As a "payment gateway for the emerging markets," with the tagline "your language, your currency," the platform has an ambitious scope: it aims to deploy aggregated payment services across the Middle East, Africa, and Southeast Asia, (think Stripe for emerging markets), while offering logistics solutions, as well as loans to merchants that meet certain criteria for sales volume.
If Ghanem pulls it off, he may be able to build what PayPal couldn't: a platform that makes it easy to transact in local currencies. Currently, the big three e-commerce companies: Souq.com, MarkaVIP, and Namshi, all offer PayPal as well as credit card integration, likely through banks, or, in Souq's case, its sister company Payfort.
Telr would not compete with PayPal, but would offer B2B solutions including credit and debit card payment, cash-on-delivery (COD), mobile payment, and payment at third party locations, where customers pay cash at local stores and retrieve deliveries later. Ghanem could, in theory, secure a reseller agreement, to offer PayPal integration as well.
In the Middle East, where COD is used as the payment for over 80% of transactions in the Middle East, according to PayPal, COD will likely remain the more popular payment service for Telr, despite its spread of products. "Our COD is no better than the others," Ghanem admits. No matter how you slice it, COD remains expensive and complicated for merchants, he says, but Telr's other options will help merchants reduce their dependence on COD.
When it comes to logistics, Telr is "finalizing talks with logistics companies in the region to offer several solutions for tackling the COD," Ghanem says.
What will likely differentiate the company the most, however, will be its ease of integration, and its loan options.
"We want to put together the right APIs so that companies have easy intregration," Ghanem said on a panel on payments today at Arabnet, stressing in an interview that quick setup time will set Telr apart from regional competitors. This won't differentiate Telr from global competitors, like Stripe, which focuses on offering "robust, clean APIs" and is now accepting 130 different currencies worldwide as of last month.
Telr will also offer financial loans, via an undisclosed entity locally based in the UAE, for companies with a history of transacting with Telr's services, who demonstrate consistent sales volume. "If we see you working for six months, we will lend you money based on your sales volume and an internal scoring system," Ghanem illustrates. Terms will be based on merchant profiles and merchant sales volume. If companies go bust, will they go to jail in the UAE, which has no bankruptcy law? The consequences will be determined by the lender, Ghanem says.
While Telr will clearly take on companies like Payfort, and perhaps others like CashBasha, the market is still too nascent for cutthroat competition, Ghanem claims: "I'm happy to see that there are new solutions for online payment. There are so many merchants coming online, that I don't have the intention to go into a price war with anyone."
After all, 90% of online transactions in the Middle East occur on foreign sites, according to PayPal, Ghanem pointed out on the payment panels at Arabnet Beirut. So it's crucial for regional players to improve infrastructure and bring that business home. "We [will be] converting that 10% to 15% to 20%," Ghanem pointed out. "We are all just ecosystem builders."
And yet, Telr is also targeting a market beyond the Middle East. While online transactions in the Middle East will account for $15 billion USD by 2015, according to PayPal, the broader market that combines the Arab World, Africa, and Southeast Asia will be worth $100 billion. The pressure is on to build quickly and reach that market more quickly than Stripe can.
Currently, Telr's Dubai HQ is registered as a local entity in the UAE, and will begin serving the UAE market in the Q3 2014.