Our updates and blog
Welcome Elias Ghanem, Advisor to Yellow
We’ve very happy to announce an exciting collaboration that we believe will help take Yellow to the next level.
Elias Ghanem has officially joined the Yellow team as an advisor! He brings an impressive mix of expertise to the table: from extensive leadership experience at some of the biggest payment companies (e.g., PayPal, Visa) to successful entrepreneurial endeavours, launching one of the fastest growing Middle Eastern payments company (Telr).
Elias will help Yellow better navigate the regional payment space, advise the founding team on strategic direction, and drive growth in this challenging space.
Over his career, Elias has held various leadership positions in the payments industry across the world, as well as specifically in the Middle East. He was Managing Director of PayPal Middle East and North Africa, GM of PayPal Southeast Asia and India, and a Visa senior executive.
After close to two decades in the corporate payments space, Elias started his own payments company servicing the Middle East (Telr). In the span of a year, as the CEO of Telr, Elias successfully acquired another regional payment processor, raised a multi-million dollar Series A, and was awarded Startup of Year 2014.
Today he serves as the chairman of Telr, advises several startups in the region, and is deeply involved in shaping the future of online payment in MENA. Elias, who is fluent in 5 languages, now lives in Lebanon with his family.
The State of Bitcoin in MENA, 2015 (part 2)
[This is the second post in a two-part series on the state of Bitcoin in the Middle East and North Africa. Read Part 1]
State of Bitcoin in MENA
There’s no other way to put it than Bitcoin usage is still quite low today, but things are moving fast and we’re seeing very promising activities. Let us break it down.
Last year (2013) there were 0 Bitcoin conferences, 0 Bitcoin meetups, 0 Bitcoin companies, and even 0 companies accepting Bitcoin. Really, numbers couldn’t be any worse. Now let’s flip to this year. I’ll outline what we’ve seen to date, but keep in mind this is in no way exhaustive, the space being so fragmented, it is difficult to get definite numbers. This should nonetheless give you a good sense of the progress.In 2014, there were 3
In 2014, there were 3 conferences covering Bitcoin exclusively (Cointalks, “Bitcoin in Lebanon” Symposium, and Dubai Bitcoin Conference), and several more traditional payment or tech conferences featuring Bitcoin segments (ArabNet, DGTL#U, Webit, GITEX, Cards and payment, etc.)
So far, we (the Bitcoin community) have launched 3 meetup groups (in Amman Jordan, Dubai UAE, and Beirut Lebanon) with 400+ members and 20+ meetups organized to date. There are now countless Bitcoin social media communities on Facebook, Twitter, and even Whatsapp (Bitcoin Arabia, Bitcoin MENA, BTCLB, BTCJO, Bitcoin Egypt, etc.).
What’s most exciting in my opinion is the launch of several homegrown Bitcoin companies:
- BitOasis, a multi-sig Dubai-based wallet and buying service
- Umbrellab, a multi-service Bitcoin company, behind the infamous albeit short-lived Bitcoin ATM, and the popular Piiko mobile top-up service
- BitFils, a way to buy bitcoins with debit cards in Kuwait
- Nouqood another Bitcoin buying service with cash in Tunisia, and online payments in other countries
- And, none other than Yellow, a Bitcoin payments company for the Middle East
- And there are several more in “stealth mode” that we will hear about soon.
As for merchant adoption, we’re still at the very beginning, and that’s what we, at Yellow, are working on and hoping to change fast. Of course, there is ThePizzaGuys famously first to accept Bitcoin, but now we have several more such as an electronics shop and eCommerce platform (ShopBuilder) in Lebanon, a crowd-lending platform (Liwwa) and coffee shop in Jordan, and Anghami the Arab music service, and many more coming out soon.
As for investments, it’s still early to say. We know that regional startups are getting funding with announcements to come soon. And having spoken to many of the major regional VCs, we believe there is a strong interest in Bitcoin; they are starting to follow the space closely.
The media coverage to date has been extensive and across all media outlets, and it seems to be growing steadily. Bitcoin in the Middle East has been covered on TV, radio, Tech outlets, print, and online, and internationally as well.
Unsurprisingly, there hasn’t been much progress on the regulatory front. Only two central banks in MENA have released (standard) notices (Lebanon, Jordan). These highlight that Bitcoin is still a new and poorly understood technology, and warns consumers against using it. Financial institutions, on other hand, are prohibited from dealing with it (but not prohibited from dealing with Bitcoin businesses). We are also seeing other governments starting to pay attention to Bitcoin, e.g., the Kuwait central bank has inquired about Bitcoin activities occurring within the country, and certain Dubai free zones have shown regulatory support for Bitcoin companies.
To recap, we went from almost 0 activity in 2013, to something that looks not unlike the US in 2011: the first batch of dedicated startups (like BitPay, and Blockchain.info in 2011), several well-attended conferences (the first global bitcoin conference being in 2011), and a rapidly growing interest from both the mainstream media and regulators.
What’s next?
For things to really take off we need to address 3 tightly linked pillars: Awareness, Merchant/Business adoption, and Customer tools. With a high phone penetration, a fast growing eCommerce market, a poor financial and payment infrastructure, and a young population, there’s a lot of opportunity for bitcoin but a lot still needs to be done.
Merchant Adoption is likely to be the first step, and can be a catalyst for Bitcoin adoption, because today they have the most to gain even in the absence of a strong network effect. Cash-on-delivery is a painful option, and adding Bitcoin is simple and free. Without exaggeration, almost every merchant we have talked to has passionately complained about the poor payment options, and is actively looking for alternatives. Bitcoin may be coming at the right time. For example, it’s not uncommon that for a small business to get online payment capabilities they need to place a deposit in their bank, pay a setup fee, and then pay monthly flat fees.
Increased merchant adoption leads to greater consumer awareness. But, as a community, there is more effort we should be doing, especially in terms of content creation and distribution. Arabic is the unifying language of the region, but Bitcoin resources in arabic are still scarce. A group of us are already working on this, having released ShuBitcoin.com, the first Bitcoin educational resource in the 3 languages of the region (Arabic, French, English). And Bitcoin News Arabia is another promising news resource (bitcoinnewsarabia.com/). But there is still more work to be done if we want Bitcoin to reach the average arab.
And finally to satisfy a greater consumer awareness, we will need to turn interested individuals into users by providing easier and more accessible ways to use and get bitcoins. Today there’s only one exchange in MENA (Igot in Dubai) and a few alternative ways of buying bitcoins (BitFils in Kuwait, Nouqood in Tunisia). Buying Bitcoins anywhere else still requires p2p transactions, or opening accounts at international exchanges. Keeping in mind that this region is highly cash dependant and has a high phone penetration, we are most excited about cash-based Bitcoin solutions (like vouchers) and sms-based Bitcoin wallets.
The State of Bitcoin in MENA, 2015 (part 1)
[This is the first post in a two-part series on the state of Bitcoin in the Middle East and North Africa]
What Is MENA?
MENA, which stands for Middle East and North Africa, is home to a population similar in size and land area to the US (350 million people spread over about 9 million square kilometers). But demographically it is moving much faster than the US. The population is growing at 2% per year, 10 times higher than developed countries (Euro at 0.2%). Young people are the fastest growing segment, age 15 to 24 account for roughly a 1/3 of the population. And some 60% of the population is under 25 years old, making this one of the most youthful regions in the world, with a median age of 22 years compared to a global average of 28.
And it’s also a generally well-educated population with high educational enrollment rates: a nearly universal access at the primary level and nearly 70% enrollment at the secondary level.
All told, and although MENA is often portrayed in the media as an economically struggling region, the rapid population growth and high education paints a much more positive forward looking picture.
A Severely Lacking Financial Infrastructure
What’s holding back much of the region’s economic growth is a troubled financial infrastructure. The 350 million people live in about 15 different countries and use about 15 different currencies and banking systems (depending on the definition of MENA used).
Financial inclusion is amongst the worst worldwide. Only 18% of individuals aged 15 and above have accounts at a formal financial institution. This varies wildly from region to region, with the UAE, for example, having an obviously higher financial inclusion rate (closer to 60%).
Similarly, credit and debit card penetration varies wildly between countries (97% in kuwait, 9% in Egypt) but on average remains very low compared to the rest of the world, and highly skewed towards debit cards (3x-4x more than credit).
The poor financial inclusion, low online payments, and fragmented financial infrastructure makes cross-border trade difficult and has delayed a lot of the eCommerce growth seen in other areas of the world.
Broken online payments, and the reign of COD
This leads us to the biggest payment pain point: 80% of online transactions are still made with cash-on-delivery. The majority of online transactions are done with an offline mode of payment. A payment option that we could almost call a lose-lose-lose situation:
For merchants that deal with cash-on-delivery, costs can range from $10 to $30 per shipment due to high product returns, re-stocking and re-shelving of undelivered products, cash-handling costs, thefts, and customers abandoning payments on delivery. More importantly, merchants often wait weeks before they are able to settle their cash-on-delivery funds into their bank accounts.
Customers, while often choose to pay with cash-on-delivery, take on additional costs that they may be unaware of. Often times merchants will increase the cost of delivery to account for their cash-on-delivery costs. Customers also need to make sure to have enough cash-on-hand and be present at time of delivery, and are thus sometimes unable to receive their products.
Finally, cash-on-delivery is a nightmare for logistic companies that now have to double as a financial institution of sorts, handling cash and accounts for their merchants in addition to their core business of logistics.
The remaining 20% of online transactions are made with credit cards and alternative online payment options. Even then, available options are fragmented and expensive. Only a couple payments companies are able to cover the entire region – with most online payments going through single-country players. This further raises the cost and complexity for any sort of cross-border trade. Merchant fees vary between 3% and 10%. (examples include: PayPal, Gate2Play, Telr, Cashi, Cashu, Skrill, Faturah, 2checkout, onecard, and more)
And there’s a host of other random regional factors making matters worse: in some countries, banks often dissuade their users from using their credit cards online, even disabling that functionality, and requiring that they purchase a special “internet credit card”. Also, credit cards issued in the region tend to have a lower acceptance rate meaning more rejections at checkout, and so on.
The light at the end of the tunnel
Far from trying to paint a bleak picture, this is, in fact, an opportunity.
For one, the region has one of the highest mobile penetration rates in the world and leads when it comes to smartphone adoption. The United Arab Emirates and Saudi Arabia both make it to the top 3 countries with the highest smartphone penetration rate in the world (with almost 3/4 of their population using smartphone devices). For comparison smartphone penetration in the US is 56%. Even better, if you look at “anyphone” penetration: fully 95% of the population owns a mobile phone of some sort.
And, mobile money is becoming popular fast, here are just 3 examples to give you an idea:
- Fawry in Egypt, one of the most popular payment services with $500bn in volume per year, launched the “Phone Cash” mobile payment wallet available to banked and unbanked customers across Egypt. Individuals can now use the service to send money, pay bills, make donations, reserve airline tickets, and more
- Lebanon, a country of only 4 million, already has 5 different companies competing to provide mobile wallets and mobile money (HeyPay, PinPay, ViaMobile, CSC group, Tap2Pay)
- The Central bank of Jordan just released a mobile “cash” framework for the country (JoMoPay)
Ecommerce growth rates have reached 45% yearly, the fastest growing in the world (compared to USA at 15%). And total eCommerce sales are projected to hit $15bn by next year.
And finally, MENA also happens to be one of the biggest sending and receiving corridors for remittances, with $40-50bn in inflows per year, and close to $100bn in outflows
What Bitcoin can do
As you may have already guessed, all of these point to great opportunities for Bitcoin to augment or disrupt. We won’t dive into much of the details of how Bitcoin can achieve this in this post, but suffice it to say, that with Bitcoin, anyone that has access to a phone, which is more than 90% of the population in the region, can, and soon will, have access to the same sophisticated financials tools as someone living in downtown manhattan, in the palm of their hands.
[To continue reading about the State of Bitcoin, see Part 2]
Welcome the new Yellowpay.co!
After much anticipation, we have now released our new and improved (and more verbose) website. As you already noticed, we started a blog to keep you updated on our progress. Make sure to check it out regularly for updates, or sign up to our newsletter here to get the updates directly in your inbox.
We’ll keep this one short, but we’ll be back very soon.
The Yellow Team!
PS: to keep things interesting here’s a picture of the Yellow team making it to the finals of the MIT Enterprise Forum Arab Startup Competition. (try to find David and Marwan)
