The Great Forces Behind Today's Thriving Digital Economy
The Great Forces Behind Today's Thriving Digital Economy
A Comprehensive Guide for Online Payments and the Saudi Market
A Comprehensive Guide for Online Payments and the Saudi Market
Apr 22, 2024
In the fast-paced age of technology, where technologies govern all sectors and even rule our daily lives, from the moment we wake up, we transition between different worlds through our phones. Your phone tells you everything you need to know what's the weather temperature, how far a certain place is, your reports and medical appointments, flight bookings, restaurant ratings. Today, we can roam without a physical wallet; everything is inside our mobile phones.
Technologies have become a fundamental nerve deeply rooted in our world and transactions. We can't imagine for a moment that a physical store would tell us, "Sorry, we only accept cash." This idea is not only no longer considerable but also incredibly rejected. Imagine with me, dear reader, that the use of cash currently in Saudi Arabia is only 8% relative to the total cash, compared to 65% a few decades ago; cash must be fleeing from our actual wallets to reach our digital wallets.
Join me on this journey to unveil what's behind online payment operations, the great forces behind today's thriving digital economy.
Why do you need to incorporate online payments to your business?
We all know that integrating our businesses with technology is not negotiable, and we must admit it's enjoyable. Let's take two steps back or a decade back to start from the very root to understand why your business needs online payments. Let's take a keen look at the current Saudi market.
In Saudi Arabia the population demonstrates a high degree of technological engagement, with notable statistics including:
A 96% internet penetration rate among people aged 18-75.
A 97% smartphone penetration rate in the same age group.
This suggests that the majority of the population has access to the internet and smart devices,. Knowingly that a significant portion (67%) of the population in Saudi Arabia is under the age of 35. which indicates that not only the access to technologies is easy, but their adoption has become very fast.
We’re living in an almost Cashless market, as Fintech adoption survey highlighted shifts in payment behaviors:
A decline in the overall use of cash.
57% of the population still uses cash at least once a week.
25% reported using cash only once a month.
Interestingly, 18% mentioned using cash only once or twice a year.
It must be said that providing online payment solutions compatible with your business structure encourages customers to complete the payment process and boosts your business revenue. A customer takes only a fraction of a second to decide that the payment process is suspicious, too time-consuming, or not smooth enough.
And you’re not only looking for your customers satisfaction, but you also care about the satisfaction derived from your revenues. there’re enormous benefits from online payments, integrate technologies to enable online payments results to:
Increasing your sales, anytime of the day your customers are allowed to purchase your products or services.
Massive reach, from national to international, to even global.
Lower Transaction Costs, compared to traditional payment methods, such as cash handling and physical check processing, online payments often come with lower transaction fees and operational costs, saving your business money in the long run.
Improved Security, reputable online payment systems employ advanced security measures, such as encryption and fraud detection tools, to protect both the business and its customers from theft and fraud.
Streamlined Operations, online payment systems can integrate with a business's accounting and customer management software, automating invoicing, billing, and record-keeping. This reduces manual errors and saves time on administrative tasks.
Enhanced Data and Insights, Online payment platforms can provide valuable data on customer purchasing behavior, popular products, and payment trends. Businesses can use this data to make informed decisions about product offerings, pricing strategies, and marketing campaigns.
How online payments work?
Before we dive into the online payment process let’s identify all parties involved in the process:
Customer (Buyer): The individual or entity making a purchase.
Merchant (Seller): The business or individual offering goods or services for sale online.
Payment Service Provider: A service provider (company) that facilitates the secure transfer of the customer's payment information from the merchant's website to the payment gateway. It encrypts sensitive information to ensure security during transmission.
Payment Gateway: A company that manages the credit card processing, including the transmission of transaction information between the merchant, the acquiring bank, and the issuing bank. Sometimes, the roles of the payment gateway and payment service provider are performed by the same company.
Acquiring Bank (Merchant's Bank): The bank or financial institution that holds the merchant's account. It receives the payment authorization request from the payment gateway and routes it to the respective card network or bank.
Issuing Bank (Customer's Bank): The bank or financial institution that issued the customer's credit or debit card (MADA). It is responsible for approving or declining the transaction based on the customer's available funds, account status, and security checks.
Card Networks (Mada, Visa, MasterCard, etc.): These organizations operate the networks that process payments between acquiring and issuing banks for credit and debit card (MADA) transactions. They set the interchange fees and facilitate the settlement of funds between these banks.
And for online payments process this process utilizes digital payment systems that enable transactions between buyers and sellers through secure online platforms. Here's a simplified overview of how online payments work:
Selection and Checkout: The customer selects a product or service on a business's website or app and proceeds to the checkout page to make a purchase.
Payment Information: At checkout, the customer is prompted to enter their payment information, which can include credit/debit card details, bank account information, or other digital payment methods (e.g., PayPal, Apple Pay).
Payment Service Provider: The payment information is securely transmitted to a payment service provider, a service that authorizes and processes payments. encrypts the data to ensure its security during transmission.
Payment Gateway: The payment service provider forwards the transaction details to the payment gateway used by the seller's bank (the acquiring bank). then submits the transaction to the card association (e.g., Mada, Visa, MasterCard) or the bank, if it's a direct bank transfer.
Authorization: The card association or bank reviews the transaction to ensure the customer has sufficient funds or credit available. It also checks for any signs of fraud. If everything is in order, the transaction is authorized.
Confirmation: The authorization, along with a transaction approval or decline notification, is sent back through the chain to the payment service provider, which then communicates it to the website or app. The customer is then notified of the transaction outcome (approved or declined).
Settlement: Upon approval, the funds are transferred from the customer's bank (the issuing bank) to the seller's bank. This process is known as settlement and can take a few days.
Completion: Once the funds have been settled, the transaction is considered complete.
Throughout this process, security measures such as encryption, tokenization, and fraud detection algorithms are employed to protect sensitive information and ensure a secure transaction environment.
Online payment systems streamline the payment process, making it fast, secure, and convenient for both consumers and businesses, facilitating instant transactions across the globe.
And for the most important question,
How do you choose the best Payment Service Provider and Payment Gateway?
Choosing the best payment service provider and payment gateway for your business involves considering several key factors to ensure that the service meets your specific needs, provides security, and offers a seamless experience for your customers. Here are steps and considerations to help you make an informed decision:
Understand Your Needs
Type of Business: Are you running an e-commerce site, a brick-and-mortar store, or a combination? Your business model will influence your choice.
Transaction Volume: Estimate the volume of transactions you expect to process. Some solutions are better suited for high volumes, while others cater to smaller businesses.
International Sales: If you plan to accept international payments, look for a solution that supports multiple currencies and international card networks.
Evaluate Fees and Costs
Setup Fees: Some providers charge initial setup fees.
Transaction Fees: Compare the per-transaction fees, which may vary based on transaction type (e.g., credit vs. debit card) and whether the transaction is domestic or international.
Monthly Fees: Check if there are any monthly service fees.
Chargeback Fees: Understand the costs associated with chargebacks.
Consider Payment Types Supported
Ensure the gateway and payment provider support a wide range of payment methods, including all major credit and debit cards, digital wallets (e.g., PayPal, Apple Pay, Google Pay, Samsung Pay), and other local payment methods preferred by your target customers.
Assess Security Features
PCI Compliance: Ensure the provider is PCI DSS compliant to protect cardholder data.
Encryption and Tokenization: Look for advanced security measures like encryption and tokenization to safeguard transaction data.
Fraud Prevention Tools: Check if the provider offers tools to detect and prevent fraudulent transactions.
Integration and Compatibility
Ease of Integration: The solution should integrate seamlessly with your existing website, shopping cart software, and other business systems.
API and SDK Availability: Check if the provider offers APIs and SDKs for custom integrations.
User Experience
Checkout Experience: Consider how the payment process will look to your customers. A smooth, quick, and branded checkout can reduce cart abandonment.
Mobile Optimization: Ensure the payment gateway provides a mobile-optimized payment experience.
Customer Support
Availability: Look for providers that offer 24/7 customer support.
Support Channels: Consider the types of support offered (e.g., phone, email, live chat).
Reviews and Reputation
Research customer reviews and testimonials to gauge user satisfaction.
Check for any complaints or issues with the service provider.
Contract Terms and Flexibility
Contract Length: Be wary of long-term contracts with high termination fees.
Flexibility: Consider whether the provider offers flexibility as your business grows and your needs change.
Test the Service
If possible, take advantage of any trial periods to test the payment gateway and processing solution. This can help you assess compatibility, ease of use, and customer support firsthand.
By carefully considering these factors, you can choose a payment service provider and gateway solution that best fits your business needs, enhances your customers' payment experience, and supports your growth objectives.
So, what's next? Dive in, and watch your business soar. Ready to take the leap? but looking for a partner on this journey? Moyasar is here to guide you through every step of your digital transformation.
In the fast-paced age of technology, where technologies govern all sectors and even rule our daily lives, from the moment we wake up, we transition between different worlds through our phones. Your phone tells you everything you need to know what's the weather temperature, how far a certain place is, your reports and medical appointments, flight bookings, restaurant ratings. Today, we can roam without a physical wallet; everything is inside our mobile phones.
Technologies have become a fundamental nerve deeply rooted in our world and transactions. We can't imagine for a moment that a physical store would tell us, "Sorry, we only accept cash." This idea is not only no longer considerable but also incredibly rejected. Imagine with me, dear reader, that the use of cash currently in Saudi Arabia is only 8% relative to the total cash, compared to 65% a few decades ago; cash must be fleeing from our actual wallets to reach our digital wallets.
Join me on this journey to unveil what's behind online payment operations, the great forces behind today's thriving digital economy.
Why do you need to incorporate online payments to your business?
We all know that integrating our businesses with technology is not negotiable, and we must admit it's enjoyable. Let's take two steps back or a decade back to start from the very root to understand why your business needs online payments. Let's take a keen look at the current Saudi market.
In Saudi Arabia the population demonstrates a high degree of technological engagement, with notable statistics including:
A 96% internet penetration rate among people aged 18-75.
A 97% smartphone penetration rate in the same age group.
This suggests that the majority of the population has access to the internet and smart devices,. Knowingly that a significant portion (67%) of the population in Saudi Arabia is under the age of 35. which indicates that not only the access to technologies is easy, but their adoption has become very fast.
We’re living in an almost Cashless market, as Fintech adoption survey highlighted shifts in payment behaviors:
A decline in the overall use of cash.
57% of the population still uses cash at least once a week.
25% reported using cash only once a month.
Interestingly, 18% mentioned using cash only once or twice a year.
It must be said that providing online payment solutions compatible with your business structure encourages customers to complete the payment process and boosts your business revenue. A customer takes only a fraction of a second to decide that the payment process is suspicious, too time-consuming, or not smooth enough.
And you’re not only looking for your customers satisfaction, but you also care about the satisfaction derived from your revenues. there’re enormous benefits from online payments, integrate technologies to enable online payments results to:
Increasing your sales, anytime of the day your customers are allowed to purchase your products or services.
Massive reach, from national to international, to even global.
Lower Transaction Costs, compared to traditional payment methods, such as cash handling and physical check processing, online payments often come with lower transaction fees and operational costs, saving your business money in the long run.
Improved Security, reputable online payment systems employ advanced security measures, such as encryption and fraud detection tools, to protect both the business and its customers from theft and fraud.
Streamlined Operations, online payment systems can integrate with a business's accounting and customer management software, automating invoicing, billing, and record-keeping. This reduces manual errors and saves time on administrative tasks.
Enhanced Data and Insights, Online payment platforms can provide valuable data on customer purchasing behavior, popular products, and payment trends. Businesses can use this data to make informed decisions about product offerings, pricing strategies, and marketing campaigns.
How online payments work?
Before we dive into the online payment process let’s identify all parties involved in the process:
Customer (Buyer): The individual or entity making a purchase.
Merchant (Seller): The business or individual offering goods or services for sale online.
Payment Service Provider: A service provider (company) that facilitates the secure transfer of the customer's payment information from the merchant's website to the payment gateway. It encrypts sensitive information to ensure security during transmission.
Payment Gateway: A company that manages the credit card processing, including the transmission of transaction information between the merchant, the acquiring bank, and the issuing bank. Sometimes, the roles of the payment gateway and payment service provider are performed by the same company.
Acquiring Bank (Merchant's Bank): The bank or financial institution that holds the merchant's account. It receives the payment authorization request from the payment gateway and routes it to the respective card network or bank.
Issuing Bank (Customer's Bank): The bank or financial institution that issued the customer's credit or debit card (MADA). It is responsible for approving or declining the transaction based on the customer's available funds, account status, and security checks.
Card Networks (Mada, Visa, MasterCard, etc.): These organizations operate the networks that process payments between acquiring and issuing banks for credit and debit card (MADA) transactions. They set the interchange fees and facilitate the settlement of funds between these banks.
And for online payments process this process utilizes digital payment systems that enable transactions between buyers and sellers through secure online platforms. Here's a simplified overview of how online payments work:
Selection and Checkout: The customer selects a product or service on a business's website or app and proceeds to the checkout page to make a purchase.
Payment Information: At checkout, the customer is prompted to enter their payment information, which can include credit/debit card details, bank account information, or other digital payment methods (e.g., PayPal, Apple Pay).
Payment Service Provider: The payment information is securely transmitted to a payment service provider, a service that authorizes and processes payments. encrypts the data to ensure its security during transmission.
Payment Gateway: The payment service provider forwards the transaction details to the payment gateway used by the seller's bank (the acquiring bank). then submits the transaction to the card association (e.g., Mada, Visa, MasterCard) or the bank, if it's a direct bank transfer.
Authorization: The card association or bank reviews the transaction to ensure the customer has sufficient funds or credit available. It also checks for any signs of fraud. If everything is in order, the transaction is authorized.
Confirmation: The authorization, along with a transaction approval or decline notification, is sent back through the chain to the payment service provider, which then communicates it to the website or app. The customer is then notified of the transaction outcome (approved or declined).
Settlement: Upon approval, the funds are transferred from the customer's bank (the issuing bank) to the seller's bank. This process is known as settlement and can take a few days.
Completion: Once the funds have been settled, the transaction is considered complete.
Throughout this process, security measures such as encryption, tokenization, and fraud detection algorithms are employed to protect sensitive information and ensure a secure transaction environment.
Online payment systems streamline the payment process, making it fast, secure, and convenient for both consumers and businesses, facilitating instant transactions across the globe.
And for the most important question,
How do you choose the best Payment Service Provider and Payment Gateway?
Choosing the best payment service provider and payment gateway for your business involves considering several key factors to ensure that the service meets your specific needs, provides security, and offers a seamless experience for your customers. Here are steps and considerations to help you make an informed decision:
Understand Your Needs
Type of Business: Are you running an e-commerce site, a brick-and-mortar store, or a combination? Your business model will influence your choice.
Transaction Volume: Estimate the volume of transactions you expect to process. Some solutions are better suited for high volumes, while others cater to smaller businesses.
International Sales: If you plan to accept international payments, look for a solution that supports multiple currencies and international card networks.
Evaluate Fees and Costs
Setup Fees: Some providers charge initial setup fees.
Transaction Fees: Compare the per-transaction fees, which may vary based on transaction type (e.g., credit vs. debit card) and whether the transaction is domestic or international.
Monthly Fees: Check if there are any monthly service fees.
Chargeback Fees: Understand the costs associated with chargebacks.
Consider Payment Types Supported
Ensure the gateway and payment provider support a wide range of payment methods, including all major credit and debit cards, digital wallets (e.g., PayPal, Apple Pay, Google Pay, Samsung Pay), and other local payment methods preferred by your target customers.
Assess Security Features
PCI Compliance: Ensure the provider is PCI DSS compliant to protect cardholder data.
Encryption and Tokenization: Look for advanced security measures like encryption and tokenization to safeguard transaction data.
Fraud Prevention Tools: Check if the provider offers tools to detect and prevent fraudulent transactions.
Integration and Compatibility
Ease of Integration: The solution should integrate seamlessly with your existing website, shopping cart software, and other business systems.
API and SDK Availability: Check if the provider offers APIs and SDKs for custom integrations.
User Experience
Checkout Experience: Consider how the payment process will look to your customers. A smooth, quick, and branded checkout can reduce cart abandonment.
Mobile Optimization: Ensure the payment gateway provides a mobile-optimized payment experience.
Customer Support
Availability: Look for providers that offer 24/7 customer support.
Support Channels: Consider the types of support offered (e.g., phone, email, live chat).
Reviews and Reputation
Research customer reviews and testimonials to gauge user satisfaction.
Check for any complaints or issues with the service provider.
Contract Terms and Flexibility
Contract Length: Be wary of long-term contracts with high termination fees.
Flexibility: Consider whether the provider offers flexibility as your business grows and your needs change.
Test the Service
If possible, take advantage of any trial periods to test the payment gateway and processing solution. This can help you assess compatibility, ease of use, and customer support firsthand.
By carefully considering these factors, you can choose a payment service provider and gateway solution that best fits your business needs, enhances your customers' payment experience, and supports your growth objectives.
So, what's next? Dive in, and watch your business soar. Ready to take the leap? but looking for a partner on this journey? Moyasar is here to guide you through every step of your digital transformation.
Moyasar Financial Company
Under the Control and Supervision of the Saudi Central Bank.
© 2024 Moyasar Financial Company. All rights reserved.
Moyasar Financial Company
Under the Control and Supervision of the Saudi Central Bank.
© 2024 Moyasar Financial Company. All rights reserved.
Moyasar Financial Company
Under the Control and Supervision of the Saudi Central Bank.
© 2024 Moyasar Financial Company. All rights reserved.