Egypt is a ‘Fintech opportunity': PayFort's managing director

Businesses offering their products online are still in their infancy, making Egypt a financial technology opportunity, says Omar Soudodi

With this year's Euromoney conference running for two consecutive days, 19-20 September, Daily News Egypt interviewed Omar Soudodi, the managing director of PayFort and the former general manager of Souq.com. Soudodi is a speaker at this year's conference and will present to the audience the reasons behind PayFort's creation, possible expansions, how it will help the Egyptian consumer and economy, and his opinion on the economic reform programme.
Payfort is a company that is specialised in electronic payment services, which uses the client's credit card to purchase goods through instalments. Recently, it started offering its services to Commercial International Bank (CIB) clients, and has provided its services to several well-known e-commerce websites such as Souq.com and Buseet.
What motivated you to offer your services in Egypt? What kind of statistics/research made you believe in the power of the Egyptian online market?
Egypt is the largest market in the Arab World in terms of population, with over 45 million internet subscribers and 17 million online buyers according to PayFort. Moreover, around 70% of Egyptians are millennials under the age of 30 and they are very comfortable with using the internet, opening bank accounts, and making online purchases, which has been growing by 45% year-over-year for the past five years.
Are PayFort's services limited to the sponsored websites, such as souq.com, or you can use it for different websites, like Amazon, BestBuy, and the like?
PayFort's business model is a "Payment Service Provider", which means we work with companies, organisations, and government entities to process their payments online whereby the end-consumer can transact directly using their credit card, debit cards and other local payment methods directly such as Sadad in Saudi Arabia, without the need to open an account with PayFort. Companies that work with Payfort enjoy various services such as fraud protection, instalments, access to local payment methods to name a few and currently live with over 1,000 merchants in six countries in the region.
How is PayFort going to expand in the future? Are there any plans to expand your services to other banks and websites?
PayFort has many relationships with issuing banks and acquirers in Egypt and beyond, with over 50 banks in partnership either as issuers or acquisition banks in the Arab World. We will continue to work closely with our financial partners in order to solve problems that stand today for both companies and individuals.
We currently have over 1,000 companies, organisations, and government entities using PayFort services in six countries and in the process of helping thousands of other establishments "big and small" go online in 2016.
Do you plan on targeting foreign markets such as the US, Europe, and other continents and regions that are not Arab?
Our main focus currently is the Arab World and we will be looking into expanding in the rest of North Africa in 2017 as well as few non-Middle Eastern markets that are important to our merchant network.
Why aren't consumers allowed to pay their instalments using debit cards? Wouldn't this make the purchasing experience relatively easier for the consumer?
Currently customers can enjoy splitting their payments using their credit line available to them by their bank and splitting it into monthly instalments and we will continue to develop our instalment product to offer it to debit cards in select markets during 2017.
Why did you limit the process of transferring payments to credit cards? Is this linked to the current foreign exchange market crisis Egypt is going through?
PayFort offers various payment methods such as Visa, MasterCard, Sadad in Saudi Arabia, NAPS in Qatar and Fawry in Egypt as we believe we have to mirror consumer behaviour while making online purchases.
What is the maximum amount of products a consumer can buy through instalments?
There are no limits on the number of products but the issuing bank that issued the card sets the credit limit.
What is PayFort's contribution to improving Egypt's economy?
PayFort is enabling Egyptian companies, organisations, and startups to enter the digital economy by offering its customers an additional sales/distribution channel by leveraging PayFort's knowhow in the region. Moreover, PayFort has been supporting Egyptian startups like Eventtus launch in other countries, such as the United Arab Emirates and beyond, as well as powering other regional companies and services to Egypt such as FlyInn and TravelStart, which increases the online supply for the Egyptian consumer. Last but not least supporting Egyptian startups that are at the early stage through various programmes and partnerships, such as PayFort's partnership with FlatSix Labs and 1864 to name a few to allow startups to harness as much opportunities with their online customers by minimising friction from payments.
How will enabling consumers to buy products online through credit instalments purchases reduce the severity of the problems in the exchange market?
One of the key challenges for companies to grow their online businesses is "increasing the target audience purchasing power" and instalments allow consumers to split the payment over a period of time which increases buyer's purchasing power on checkout and creates another incentive for the customer to use their card online versus buying with cash.
Won't buying products in US dollars be a disadvantage for the general exchange rates in Egypt?
PayFort offers local currency for all of its merchants so companies and customers transacting on their websites do not have to worry about foreign exchange risks or adhering to local laws set by central banks.
Will PayFort be a part of the solution for fixing the Egyptian economy? How?
Egypt is a "Fintech opportunity". Only 10% of the population is un-banked and the phenomenon of companies/organisations offering their products and services online is still in its infancy. At PayFort, we believe that Egypt will undergo a financial transformation in the next five years with more establishments and individuals entering the "formal economy" and utilising Fintech products, such as online payments, alternative lending, savings/investments, and other banking products that will enhance their lives.
What is your opinion on Egypt's economy?
Egypt has been undergoing a transformation for the past five years, both economical and political, but the fundamentals are strong with a big consumer base, healthy balance sheets for its banking sector, skilled labour force and the recent return of foreign direct investments as well as the resumption of tourism will have a positive impact but might need some time to reap those benefits.
Is the current economic reform programme enough to maintain and improve the Egyptian economy?
I am a big believer that both the private sector and governments need to work hand-in-hand to grow any economy, address challenges and reach compromises in order to solve short-term challenges while building a strong long-term roadmap that will contribute to growing Egypt's GDP, increasing foreign direct investments, and shrinking our trade deficit.
Moreover, I believe that with accelerating "financial inclusion in Egypt" it will not only benefit companies and the public but also the government as it will realise more tax revenues from people entering the formal economy and creating programmes to offer incentives for small establishments to do so will pave the way for a healthier more technologically advanced Egypt.