E-payment push: How can SMEs quickly move from bricks-and-mortar to online?

Bahrain-based Paytabs believes the most essential component of a business is its ability to make and receive payments

A box of orders moves along a belt at Amazon's fulfilment centre in Peterborough, Britain November 15, 2017. Image used for illustrative purpose.

A box of orders moves along a belt at Amazon's fulfilment centre in Peterborough, Britain November 15, 2017. Image used for illustrative purpose.

REUTERS/Darren Staples

If you are a retailer in the Gulf then the question whether to invest in online is no longer up for debate. While the region is known worldwide for its lavish malls and retail culture, consumers are increasingly going digital when it comes to their shopping habits, with consultancy firm A.T. Kearney last year forecasting that the e-commerce market in the Gulf will grow from $15 billion in 2018 to $24 billion by 2020.

But if you are a family business who has worked for decades out of the same store in the corner of one of Dubai’s traditional souqs or you are a fresh-faced start-up in Riyadh with big ideas and small budgets, how can you start earning revenue online?

The obvious answer is to partner with some of the big new online players in the market, such as Noon.com, which is backed by the chairman of Dubai’s biggest mall, or global giant Amazon, which last year acquired local start-up souq.com.

Whether you join up with a big partner or set up your own online presence, sorting out your payment process is critical and this is where Bahrain-based online payment processing company Paytabs wants to help.

Set up in 2014, the company’s CEO and founder Abdulaziz Aljouf believes the most essential component of a business is its ability to make and receive payments, noting that in this region unfortunately this is still a complicated process.

Speaking to Accelerate SME during an interview last month at the company’s Dubai office, Aljouf pointed out that it can sometimes takes months for a merchant to get a live merchant ID from a bank to regulate its online payment transactions with customers.

“When we first kicked off the business we decided to build our own engine, and really take care of the entire ecosystem of payments. So we are not only bringing the merchant to the bank, we are working with the bank to provide them with the technology, the support, and the manpower. What we have built is the entire chain of processing. We are the new face for start-ups to start, instead of going through the corridors of banks and taking a long time to get on-boarded,” he said.

Aljouf said the company’s aim is to create solutions that allow small retailers to bypass banks and point-of-sale machines.

“What was going on before PayTabs was merchants go to the banks and go through a long process, but what we have done is work with banks to create the support needed.”

The founder noted that start-ups by nature are agile and move fast, which means banks and regulators need to catch up.

“I think regulators nowadays changed; they are more adaptive, they are pushing forward. I see regulators are adapting much faster than banks. It was tougher a few years ago,” he said, adding, “But regulators have caught on. Things have dramatically changed; we are getting licensed from many countries. We are licensed by the Central Bank of Bahrain and Saudi is in the process. We are also getting lots of support from some banks,” he said.

Full circle

A self-professed fan of the start-up ecosystem, Aljouf reflects that the ecosystem and regulatory environment have come a long way since he founded his first start-up in 2011.

He added that the funding scene has also “drastically changed.” Two years ago, he noted, it was very difficult to find an investor willing to take a risk on start-ups.

Aljouf confessed that now that he’s in the investor seat he realises how many mistakes he’s made raising funds. He noted that entrepreneurs need to pick the right investor, likening the relationship between investor and entrepreneur to a marriage.

“There is a gap between entrepreneurs and investors in the region. Entrepreneurs assume that investors just have the money in the bank and are looking for something, but the investors are looking for the right company, and they will take the time to understand where you are going with the venture,” he said.

He also pointed out that there is a process that has to take place before investors decide to place their money in a start-up and it has to take time.

“You cannot just decide to start funding today and start knocking on doors tomorrow. You really need to build a relationship with the investors, you need to make the investor company smart; introduce them to your company, educate them about what you do- even if you are not looking to raise funds,” he added.

Third time lucky?

This is something Aljouf knows all too well as he is currently in the process of talking to potential investors to fund the expansion of Paytab’s footprint beyond its Middle Eastern home base and across Africa and Asia.

Last August, the company raised $20 million in funding from a group of undisclosed sources, the largest investment for a fintech start-up based in the Middle East and North Africa. Wa’ed Ventures, Saudi Aramco’s venture capital arm, was the sole early investor in the company and also participated in the series B round.

Aljouf declined to comment on the size of the new fundraising round or the time frame expected to close the investment, but said the deal was moving “really fast”.

He explained that the company, which was recently ranked number one in Forbes’ Top 20 Fintech Start-ups in the Middle East, will use the fresh funds to expand its human capital, push its brand equity and work on a number of acquisitions.

“I think we are at a stage where we want to position the brand on a continental scale,” Aljouf said, adding: “We are focused on the entire continent of Asia. Today the Middle East is our second market and APAC (Asia-Pacific) is our main market.”

Aljouf added that the company is working on a number of acquisitions in Africa, the Middle East and Asia that would complement PayTab’s offering in the market and allow them to expand their reach globally.

“Our whole value proposition at PayTabs is to empower start-ups and merchants to go global. We want to provide flexible financial solutions to small and medium sized enterprises (SMEs) that will allow them to grow beyond their country boundaries,” he said.

(Reporting by Reem Wafai; Editing by Shane McGinley)

Our Standards: The Thomson Reuters Trust Principles

For more tools and news on SMEs visit the Thomson Reuters Accelerate SME portal

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here. 

© Accelerate SME 2018

More From Technology