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What are the popular payment methods in Nigeria compared to Saudi Arabia?

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The Middle East and North Africa (MENA) area has witnessed a notable surge in the e-commerce industry in recent times, coinciding with notable progressions in point-of-sale (POS) payment systems. This dynamic change, which reflects a larger worldwide trend toward digital transformation, is reshaping how customers make purchases and how organizations run. This piece explores the new payment patterns that are appearing in the MENA area.

Globally, payment systems are evolving quickly due to changes in consumer behavior and technological improvements. Nigeria and Saudi Arabia offer distinctive case studies in the MENA area. Nigeria is still strongly dependent on cash, but Saudi Arabia is seeing a major transition in payment methods to digital ones.

Payment Methods in Nigeria

1. Nigeria's Cash Dominance

In Nigeria, cash continues to be the most common mode of payment, making up 55% of total POS transaction value in 2023. From 2023 to 2027, cash usage is expected to decrease at a compound annual growth rate (CAGR) of -4%, despite the growing acceptance of digital payments. By 2027, cash is anticipated to continue to account for a sizeable portion of POS spending—42%.

2. Nigerian online retailers accept cash on delivery

Cash holds significant value in e-commerce, as seen by the 15% share of cash on delivery (COD) in Nigerian e-commerce expenditures in 2023. Although this percentage is expected to drop to 9% by 2027, it nevertheless emphasizes how common cash is in online transactions. Because of the lack of digital infrastructure and trust concerns, COD is still widely used.

3. A2A Payments' Rise

In Nigeria, account-to-account (A2A) payments are becoming more and more common for online transactions. The growth of this payment mechanism is expected to reach 34% by 2027, mostly due to its direct transfer capabilities and security. A2A payments are a dependable substitute for cash and conventional credit card payments, especially in the e-commerce industry.

4. Nigeria's Digital Wallet Market Is Growing

In Nigeria, the use of digital wallets is predicted to increase from 11% in 2023 to 22% by 2027. Wallets like PayPal, Paga, and OPay are becoming increasingly popular as cell phones and internet connections become more widely used. An increasing number of Nigerian consumers find digital wallets appealing due to their security and ease. 

Payment Methods in Saudi Arabia

1. Saudi Arabia's Debit Card Industry Leader

In Saudi Arabia, debit cards are the most widely used form of payment, both online and offline. Debit cards constituted 30% of the value of point-of-sale transactions in 2023 and 27% of e-commerce spending. Debit cards are widely used in Saudi Arabia, largely due to the popularity of the Mada card brand, which is controlled by the Central Bank of Saudi Arabia.

2. Reduction in Cash Advances

Since the epidemic, Saudi Arabia has seen a sharp decline in the amount of cash used in transactions, with cash accounting for just 29% of total value in 2023 compared to 61% in 2020. Cash continues to be important even with this drop; in 2023, it will make up 13% of the total value of payments made in e-commerce, with 4% coming from pre-pay alternatives and 9% coming from COD.

3. Saudi Arabia's Uptake Of Digital Wallets

By 2027, digital wallet usage is anticipated to increase significantly in Saudi Arabia. In 2023, a sizable percentage of POS and e-commerce transactions were made using digital wallets. Wallets like Apple Pay, STC Pay, and Tabby are growing more and more common because of their ease of use and the nation's strong digital infrastructure.

It can be difficult to navigate the complex payment landscape in the Saudi Arabia and Nigerian regions, with its variety of preferences and legal obstacles. However, you may build a customized digital wallet and payment platform in Nigeria and the Saudi Arabia region that easily integrates all of your various demands by collaborating with reputable payment solution providers like PayNet Systems.

This strategy will not only help you save time and money, but it will also enable you to promote up to ten times more quickly, which is revolutionary in the rapidly evolving digital landscape of today.

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This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.

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