Yamsafer tackles region's payment challenge with cardless bookings

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Faris Zaher, CEO and co-founder of hotel bookings site Yamsafer, thinks his team may have come up with a solution to the region’s payment riddle – at least for their industry. Made possible by a $1 million USD investment from Sadara Ventures in September 2012, Zaher and his team spent last year “testing the waters… we iterated a lot in terms of the model,” he says in his sunny Ramallah office. And the potential for the concept they came up with – cardless booking – is something a lot of people are getting excited about.

The idea is simple: allow customers using the site, which facilitates bookings at hotels big and small across the whole region, to make a reservation without their card being charged. They then pay in cash upon arriving at the hotel. This assuages the concerns of the region’s average internet user, plagued by fears about the security of their credit card information online. It’s also attractive for hotels, says Zaher, in that hotels receive a larger volume of business with the same percentage of no-shows that they see through other distribution channels. The logic is that customers are more likely to book if they aren’t required to authorize their credit cards.

Yamsafer’s numbers since the launch of its new cardless booking model have proven this logic to be sound. “People love Cardless Bookings,” Zaher says. “We’ve had triple digit growth in sales over the past three months” since they launched the new model in December. “This reflects a great product market fit.”

The cardless booking concept is just one way the Yamsafer team has taken a successful international business – Netherlands-based hotel reservations site Booking.com that claims to deal with 550,000 hotel room night reservations per day – and localized it. Another way has been to reach out to smaller hotels or guesthouses off the beaten tourist track that aren’t already served by international hotel booking engines, “helping these mom-and-pop properties market themselves.” For big hotel chains that are already listed on other sites like Booking.com or Expedia, Yamsafer works to undercut the competition in terms of price, room allocations, or perks (using methods he wouldn’t disclose on the record).

“We’re not reinventing the wheel,” Zaher says, “it’s a model that has existed abroad.” But however easy he might make it sound, it’s taken time – and money – for them to strike what seems like the right balance. The $1 million USD seed round in 2012 was big for the region, especially for a startup that bootstrapped for 12 months on only $12,000 USD, and it gave Yamsafer the freedom to play around while looking for the perfect market product fit.

Sadara has also supported the Yamsafer team with attention and advice. Cardless booking was a “wild, unproven concept” at the time the team came up with it, but rather than balking at the inherent risk, Sadara’s management team and advisory board was “just as excited about it as we were,” says Zaher. “I have to say,” he continues, “critical discussions with our investors and members of their advisory board… made Cardless Bookings mature at a much faster rate.”

Everything seems rosy now, but it hasn’t always been this way, of course. Zaher’s first startup, a listings site called Manshar, was “a complete failure,” he says ruefully. It took this experience to give him the insight – and the introduction to co-founder Sameh Alfar – that has made Yamsafer what it is today. The most important lesson, perhaps, was that it was, and may still be, untenable for regional startups to rely on advertising as a revenue stream. “After Manshar, I didn’t want to do anything advertising-based,” he recalls. “The revenue model here was a lot more solid. I wanted to sell something real to people and have them go through an experience.”

He’s come a long way from Manshar, but you won’t find Zaher kicking back at one of Yamsafer’s more luxurious listings on holiday anytime soon. This year, the startup’s growth is set to continue apace. The site now lists 3,000 hotels in 16 countries (North Africa, the Levant excluding Syria, the GCC, and Turkey), and the team is working hard to add as many more properties to its listings as possible. Zaher prefers to keep specific numbers vague, but he expects inventory to triple by the end of the year; this is a “much faster” acquisition rate than that of international players, he says. The next challenge for Yamsafer may be scaling outside the region, something Zaher believes may be driven by the cardless bookings model. “Low credit card penetration rates are shared by more than one market,” he says. “We’re trying to build a technology that’s not region-specific. If we have the technology, we can then layer on top the culture specific stuff.”

But plans to scale globally (and even develop a white label service based on Yamsafer) remain far in the future. “We have too much on our plate already,” Zaher laughs. He’s right: if the Yamsafer team wants to change how the region pays for things on the internet, they’ve got their work cut out for them. Their cardless booking concept, however, may be a start.

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