3. • Paypal
– You and I can use Paypal, however you are unable
to withdraw funds as a merchant from banks here
(they have yet to make agreements on that)
– You can set up as a merchant in USA / Europe
using Paypal account there – you will be
withdrawing from a UAE bank on an American
Bank account – currency charges will apply
– Can still be cheaper though depending on # of
sales
4. Network International
• NI is the Emirates Bank Payment Gateway for
authorisation & processing of online
transactions
• Supports online transaction processing and
merchant payments of Internet transactions
through eCompany (A business unit of Etisalat
for e-business solutions)
• DEWA / DED / DIC / Police etc using this
solution
5. Some Stats for NI
• Network International provides credit-card
payment processing services to 70 banks and
17,000 merchants.
• Its 45,000 card readers are in 28,000 stores
across the region
• It also operates about 700 ATMs in the Gulf
• Abraaj owns 49% of NI (paid 2 billion AED for
it)*
*Purchase price contingent on NI meeting certain profit targets
6. What it offers
• Offers MIGS (Mastercard) / Comtrust (Etisalat)
and Enterpayment as different types of gateways
• Incentivizes merchants to bill customers in their
currency of choice (dynamic currency conversion
/ Planet payment – pay in your currency) – good
for tourists….
• Also has a GPRS solution for payment processing
• Also requests $25,000 security deposit!!
7. • Payment gateway costs – can be any or all of
the below:
– Set up costs
– Per Transaction fee
– Monthly or yearly subscription fees
– Per currency fees
– Deposit at bank to counter fraud
10. • 500 sales of item priced at $25…
• $0.9975 * 500 = $498.75
• $0.45 * 500 = $225
• Total fees = $723.75 (plus your monthly fee of $5.99!)
– ($729.74)
• If you buy at $17, sell at $25 – you make $4000
• Minus $729.74 for processing
• 18% of your margin is being eaten by payment gateway!
• Don’t forget costs for usual business overheads as well…
11. Example: Innovate Payments vs Cashu
• Transaction fee
– IP – 3.5%
– Cashu – 3.3% + 2 aed
• Set up fee
– IP - $200 per currency, (dirhams and dollars offered )
– Cashu $1000
• Monthly payment
– IP - 150 AED
– Cashu – annual $1k -$3k depending on how many products
you have and sales volume
• Security deposit
– Approx $10k for both
12. Comparison outcomes:
• Innovate - $700 per year (1 currency) +
deposit
• Cashu - $3000 per year + deposit
• 500 sales of $25 item:
– Cashu $272 (transaction fee) + $412.5 (% fee) =
$684.5
– IP - $437.5 (about 10% of your margin)
15. • Trade licence – 30,000 AED + 100,000 AED in
bank (working capital)
• Merchant account (fees?)
• Payment gateway deposit – 20,000AED –
40,000AED….
• Estimate $40 - $50k just to set up a business
with a payment gateway in place in UAE….
16. • Issues:
– Lack of easy to compare pricing across payment
providers, banks and free zones
– Pricing can be low per transaction – if you have
volume payments – need to factor this into
business model over time
– DON’T FORGET DELIVERY COSTS!
– Still better than COD (cash on delivery) in long
term…..
17. E-Commerce stats (by Aramex)
• 50% of online shopping in Saudi originates
outside of major cities (think m-commerce)
• Amount of returns for COD is 7 times higher than
when people pay online
• Biggest markets for Shop and Ship –
– Kuwait, Saudi, UAE
• Biggest markets for E-commerce in general
– UAE, Saudi, Egypt
• Who pays more online?
– Jordan, Bahrain, Oman, UAE and Qatar
18. Something startling
• Although everyone says, people in the region like
to “touch” and “feel” stuff, look at the top
category for online purchases:
– Apparel
– Electronics
– Books
– DVD/CD
– Shoes
– Bag/Case
– Mail & Magazines
19. Some ideas to get started
• Spend your money on testing before you
invest in your own ecommerce platform
• Set up shop on www.nahel.com /
www.souq.com / www.dokkankom.com /
www.shopgo.me
• Test various customer acquisition and
marketing strategies
• Co-market with others in the same vertical
• DATA DATA DATA!
20. Points to consider
• Dropshipping vs Warehousing, inventory
management and logistics – Aramex / Fedex /
DHL
• Time to process customer payments into your
bank account and then to suppliers
• Returns – how can you minimize these and
how much will they cost you?
• Customer service
21. Some useful contacts
• @hudz from www.glowskies.com
• @okassim from www.jadopado.com
• Rania Kanaan from www.ananasa.com
• @nadersm from www.nahel.com
• @mohanadgh from www.shopgo.me
• @ronmou from www.souq.com
• And www.wamda.com
• http://www.wamda.com/2012/06/debates-day-
one-of-coeecommerce