This post originally appeared on the JadoPado Blog and has been re-produced here to preserve the JadoPado historical record.

On the back of another how to set up an e-commerce business in Dubai over on the JadoPado Forums that turned into a discussion on payments (we always end up here!) I wrote a bit of a mega response and figured that it would make sense to turn it into a blog post.

It’s been a few years since I wrote UAE Payment Gateways and followed it up with Understanding Online Payment in the UAE, the payments space has changed significantly, and a number of new entrants have made getting started dramatically easier.

It does however remain daunting to scope out the entire space and understand who does what. I’ve broken this post into three areas: 1. Merchant Account Providers, 2. Third Party Payment Gateway providers 3. Integrated Payment Providers

Merchant Account Providers

This is an oligopoly situation in the UAE and is currently dominated by:

1. Network International (majority owned by Emirates NBD, with the balance 49% owned by PE house, Abraaj). In a recent conversation with them I was told that they’re bringing in a new licensed internal payment gateway product to replace MiGS (an archaic platform owned and operated by MasterCard out of Australia). They also work with CyberSource.

2. Mashreq Bank (an arm of Abdul Aziz Al Ghurair’s far reaching empire). They used to primarily work with MiGS, but I’m not sure if they work with anything else or with anyone else at this time (outside of etisalat’s Etisalat Payment Gateway product — keep your distance).

3. National Bank of Abu Dhabi (NBAD), who tend to top the earnings rankings in the UAE in terms of banking, and are the second largest lender in the UAE. They work with a number of third party gateway providers.

We currently work with NI on the merchant account front and have found them to be more flexible versus the others, however your mileage may vary.

Third Party Payment Gateways

A 3P gateway will generally need to work with either a local or international merchant account provider in order to provide settlement into a merchant account.

1. Telr. Founded by Elias Ghanem, the ex-Head of PayPal for the Middle East. I was told that they acquired Innovate Payments a few months ago, but I haven’t seen an announcement confirming this. I’m not sure who they work with on the merchant account front at this time. They have offices in Singapore as well as Dubai, so it could be someone outside the region.

2. Gate2Play. Interesting firm, part of MEVP’s portfolio (Regional VC). They license products from PayDIBS in Malaysia as well as Pay.On out of Germany. They work with NBAD in the UAE and with Bank Audi in Lebanon / Jordan, if I recall correctly.

3. CashU / PayFort. A business that was created by Jabbar Internet Group (Maktoob, and was split about 18 months ago into two components. CashU focuses on prepaid card based payments and its sales and distribution network, while PayFort is a more traditional 3PG provider. If I recall correctly they license a product from Ogone Payments (now Igencio).

While I like the team at PayFort, my challenge is that they roll up into the Souq Group, which for a merchant looking to scale or compete against Souq and its other businesses is a definite conflict of interest.

PayFort primarily works with NBAD in the UAE.

4. The Checkout team hit the UAE last summer and have been actively seeking out merchants in the region. They’re headquartered out of London and work with merchant account providers in Europe. Their rates will be competitive if you’re doing volume, and from my recollection handling and transferring AED is not an issue.

5. CyberSource. An entity owned by Visa Inc that opened up a local office in late 2012 / early 2013. We’ve been a CyberSource customer with their UK operation for a while. I’m biased, but I like their product and what we’ve been able to build around it. They work primarily with Network International but may have added other options.

Integrated Payment Providers

1. PayPal. The big boys in the space. PayPal’s Middle East team based out of Paris have also been actively building both their consumer and merchant components in the region. Again, I’m biased, but given that I was very actively against them as a payment option a few years ago, I’ve been happy with the volume and effectiveness of having them as a part of our payments mix.

Whenever I hear about someone complaining about their rates being higher than a more traditional setup, I try to point out that you’re paying a premium for access to a global base of over 160 million customers (with a large percentage active) who are already shopping online. An AED withdrawal option is very much on the cards in the near future. The rumour is that they’re expecting to execute it with Network International at a cost of 1% per withdrawal. It’s high, but it’s better than not having a localised option. In terms of exchange rates, given that USD (which is what most will work with in terms of PayPal) is pegged to AED, a merchant will not take an FX hit.

We continue to work with them on a manual wire transfer basis, which is offered to merchants hitting a given USD volume per month.

2. 2Checkout. Their model changed a while ago from being a merchant representative to a more pure play integrated payments model. My recollection is that they can accept AED and will transfer out AED to your bank account as well. I’m not sure who they’re handling this with in terms of correspondent banks locally or whether they have an FX relationship elsewhere.

Worth exploring if you’re looking to get up and running to test out a concept, with an eye towards a more traditional (and cost effective) set up once you’ve got a bit of volume going.

More reading:

  1. My original post on UAE Payment Gateways back before we started JadoPado.
  2. An update that I wrote on the JadoPado Blog back in December 2011, Understanding Online Payments in the UAE. The comments are definitely worth reading.
  3. From back in 2012, but what seems to be a very practical take on payment gateways in the UAE by the ever knowledgable Alex Tohme.

Update, 10th February 2015: PayPal’s just announced that their option to allow Business accounts to withdraw funds to a bank account in the UAE via Network International has just gone live: Fees start at 1.75% for amounts from USD 20 to USD 1000, 1.25% for anything from USD 1001 to USD 5000 and move down to 1% for any amounts exceeding USD 5000.