Cash-Back credit cards improve finances in the MENA region

Like other emerging markets, the Middle East and North Africa (MENA) has one of the largest underbanked populations in the world, with over 90% of the population transacting cash-only and wirelessly. access to credit or formal savings accounts.

According to Momtaz Moussa, co-founder and CEO of Egyptian FinTech rewards app Lucky, solving this problem and bringing the masses into the financial fold has required taking slow steps over the past few years to make the transition to financial services and digital as transparent as possible. possible for the region’s millions of “credit-blind” consumers.

“Going to the underbanked population with a proposition similar to Revolut, for example, wasn’t really going to make a dent in the market where most of the supply isn’t even integrated into the financial system,” Moussa said. to PYMNTS in an interview. . “You couldn’t just hand out bank cards back then and expect people or transactions to suddenly become cashless.”

He said that was the premise on which Lucky was built in 2019 as part of a larger goal to develop a strong network of merchants who accept digital transactions and, in turn, empower consumers to use digital transactions.

Since then, the Cairo-based company has grown significantly, becoming one of Egypt’s leading FinTech applications for consumer credit products, aided by competitive cashback and bill payment programs for its customers. 8 million users.

Read more: Egyptian FinTech Rewards app Lucky nabs $25M in Series A funding round

With Lucky, customers also have access to a strong merchant network of over 30,000 stores, including Jumia, Nike, Amazon, Booking.com, KFC and Burger King, through which they enjoy exclusive deals and discounts on items such as clothing, food and electronics.

Read also: Egyptian fintech Lucky Eyes MENA after $25m funding round

And to further tap into the opportunities created by the region’s young and heavily unbanked population and cash-centric economies, the company recently announced the completion of a $25 million Series A funding round, claimed as largest Series A funding round for a FinTech in North Africa. country.

Boost consumer creditworthiness

According to Moussa, the new capital will be used to develop Lucky’s credit capabilities and better financial products as customers gain experience in using credit, which can be “tricky” in a country where less 5% of the population has access to a credit card. or credit history.

One of the reasons for this discrepancy, he explained, is that the banking system lacks the capacity to provide credit at lower risk due to a lack of infrastructure, as banks can. developed regions.

Addressing this significant lack of formal data by becoming the business network for underbanked young Egyptians has been key to growth, Moussa added, giving the company “unparalleled access to data” that has allowed them to work hand in hand. working with banking partners to boost consumer creditworthiness.

The government also launched iScore (Egyptian Credit Bureau) – the equivalent of Equifax or TransUnion in the United States – in 2008 to increase financial literacy and credit awareness in the country. And while the initiative is still in its infancy, Moussa said it has paved the way for companies like Lucky to access more data to further its mission of extending credit to consumers.

Banking licenses pave the way

Last December, the company announced the launch of its first credit card to provide consumers with the industry’s best cash back rewards, and with the recent approval of its prepaid card license, Moussa said these two products are going to be extremely important “to provide our underbanked users with the banking experience they have never had before.

The company also plans to launch a prepaid product that will expand the reach of its merchant network as users add the card network to the existing QR code it has built over the years.

“It also provides an even more seamless experience in terms of approval and transaction than what already exists,” he said, adding that “we are very optimistic about what will follow now that we have these licenses. digital banking”.

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NEW PYMNTS DATA: THE FUTURE OF BUSINESS SUPPLIER INNOVATION STUDY – APRIL 2022

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