Middle East expansion plans for Web payment provider
The online payments provider Cashu is looking to grow its merchant base by 100 new companies every month for the next two years.
The company, based in Dubai and part of the Jordanian Jabber Internet Group, works with 7,000 merchants across the world.
"We know the problems with payment acceptance in the region and many businesses test their ideas on Cashu," said Martin Waldenström, the Cashu chief executive. "When someone starts an online shop, they can do more or less everything themselves except for the payment.
We have made it our mission to make it as easy as possible [for merchants]."
The company processes about US$500,000 (Dh1.83 billion) of transactions a year, of which more than 50 per cent is for virtual goods.
The gaming sector contributes some 80 per cent to its customer base, spurred on by young gamers without credit cards keen to play games online through monthly subscription fees or payment for virtual goods.
According to gate2play, an online payment aggregator, the regional market for virtual goods is worth $100 million and is expected to rise to $150m by next year and $2.2bn by 2016. The virtual-goods sector is worth about $6bn worldwide.
"Most of our buyers are from Saudi Arabia, Kuwait, the UAE and Egypt."
Those are by far the countries where we see most transactions," said Mr Waldenström. "Egypt has fluctuated. It had a very good growth rate until a year ago, but we still have a substantial amount coming in from Egypt - it's just not growing very fast."
Its prepaid online cash cards have proven popular with consumers without credit cards. Users can top up their Cashu cards and use them to make online payments.
The company is also launching Cashu Direct early next year, a new payment method in which customers can make purchases online and have up to 24 hours to pay the amount in cash at a given retail outlet.
The company will begin the service with Air Arabia and said interest from airline operators had been strong.
"Credit card penetration is more than 60 per cent in the UAE, but in Saudi Arabia and Kuwait it is about 5 per cent. There is a higher penetration of debit cards, but these are not usually accepted online," said Mr Waldenström.
Cash-on-delivery remains the most popular method of paying for goods bought online, he said. But the high cost for merchants, especially for cross-border transactions, result in the service being eventually phased out across the Middle East, analysts believe.
Updated: December 4, 2012 04:00 AM