This document discusses payment gateway options for UAE startups. It provides information on providers like Cashu, InnovatePayments, 2Checkout, and Paypal. It also profiles Network International, the main provider for the UAE. Key points covered include payment gateway costs, example transaction fees, and comparisons of provider pricing. Overall issues addressed are the high upfront costs to set up an e-commerce business and process payments in the UAE.

1. PAYMENT GATEWAYS
For UAE STARTUPS
by
Alexandra Tohme

2. • Cashu – www.cashu.com
• InnovatePayments -
http://innovatepayments.com/
@innovatepayment on Twitter
• 2Checkout - www.2checkout.com
• Gate2play - http://www.gate2play.com
• Paypal – www.paypal.com
• Network International – www.network.ae

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

9. • Example: Item listed at $25
• 3.99% transaction charge = $0.9975
• Additional $0.45 transaction fee
• = $1.4475 (merchant bears cost)
• Sell at $26.5
• 100 sales per month = $45 (transaction fees)
• 500 sales per month = $225

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)

13. Comparison table v1.

14. • SETTING UP:
• Trade licence (RAK / Fujairah / ?)
• Merchant account
• Payment gateway

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

22. @alextohme
www.alextohme.com