eCommerce for Starters - Payments in Egypt

Sometimes we get basic questions that we wonder how it is not known knowledge to everyone, and we realized that we don’t really come across any articles or blogs that explain these things in the simplest manners for how to setup the ecosystem surrounding your online store. This article we will tackle payments.

Payments issue looks like a complicated one although we are lucky to be in an era when we have new innovation in payments every month.

Cash on Delivery

Today, around 85% of Egypt online shoppers prefer COD as a payment method when buying online, Consumers mainly prefer cash on delivery because of a lack of trust*.
The simplest form of payment that forms the majority of online transaction is cash on delivery (COD). For this one you need a strong shipping company and we will talk about this later.
Cash on delivery provides an access to the majority of the buyers. There is always the higher risk of order return because customers don’t really commit to having the product by just placing the order. Also you usually pay the shipping company a bit extra for collecting cash. You will wait longer to get your cash from the company that is collecting, so you need to be careful with your cash planning.

 

Credit Card Payments

Credit Card penetration in Egypt is around 17% by the end of 2017*.

In Egypt, you need to be a registered business so you can have this facility (having commercial registration paper and a business bank account). So if you are selling something on the side as a hobby, it’s not for you. Also if you think about getting into dropshipping, you need to register a company first.

Payment gateways (PGW) that serve Egypt from Egypt or the Middle East are not so many. It always depends on many factors to select the best payment gateway for you.

 Here is how it works, the charging goes as:

  • Monthly subscription
  • Transaction fees (percentage)
  • Transaction fees (fixed amount)

PGWs usually use one of these charging methods or a combination of two or even the three together, depending on their pricing model.

PWGs have two ways of transferring the money to you (in the simplest form):

Being a PSP (payment service provider):

  • The cash is automatically transferred to your bank account a little after the customer makes the payment. They don’t touch the payment. They only act as a technology layer that enables you to receive the payment.
  • In order for you to have a PSP agreement you need to sign with the bank directly as an ECommerce merchant.
  • This method is usually done for big/mega merchants, whom every 0.01% affects their business model and profitability dramatically.
  • The issue always lies in the experience. Banks don’t invest in a technology that provides the best experience for the users. You’ll need an integration or some kind of customization (or even to sign with a PWG) to get things better for your customers.

The second way, and the most popular now, is being a payment aggregator:

  • When customers make payments àthe cash goes to the PWG àthey take their fees and settle your cash and transfer it to your bank account periodically (usually weekly).
  • You only need to sign a contract with the payment gateway, regardless what bank you deal with.
  • This option opens many other payment options for you with these aggregators that we will talk about shortly.
  • These PGWs invest a lot in the user experience, so you don’t need to worry about this. You only worry about how you would integrate with your own website that’s all.

New methods for payments:

We’ll quickly go through the new innovations we see with the payments everyday. PGWs in Egypt are investing a lot of time and effort in order to make it easier for you to give your customers many options to pay:

  • Paying by Wallets:

Like Vodafone Cash and other known wallets. More and more people are using their wallets for similar transactions everyday, you would want them to pay for you too!  

  • Paying through the Kiosks:

Through Fawry, Aman, and other cash aggregators. This is a perfect solution for someone with no credit card who wants to preorder something, or buy a virtual service.

  • Installments?

Yes! We see Valu now that has started making this dream come true for so many merchants and customers.

To sum up the payments dilemma; you, as a merchant, need to consider these factor:

  • What payment options I want to avail to my customers?
  • What is my cash cycle and how long can I wait for my cash to arrive?
  • What is the experience I want my customers to go through?
  • What is the technology I am using, and what is the most suitable payment option to integrate with it?

If you want to ask us our opinion, we usually use Accept Payments as they tick most of the options we talked about, and they're very easy to integrate with Shopify.

Will leave you here, please let us know what you think of the post, and how to improve it. 

And yes, please forward it to those you think need this knowledge.

*Sources: Google MENA consumer survey 2018

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