Transforming the Payment Landscape through Innovation

MASTERCARD sees a promising future for its business, as the company’s innovative technologies and solutions are not only catering to the needs of consumers, its partners and regulators but also fostering sustainable economic growth and fuelling the development of the digital payments landscape across the region.

J.K. Khalil, General Manager for Mastercard’s MENA East cluster, which spans the UAE, Qatar, Kuwait, Oman and Pakistan, said the company recently successfully forayed into the Chinese market. This created even greater confidence in the global technology brand, known for its out-of-the-box initiatives in the payments industry and beyond.

“We also finalised our platform in China to become the first global company that will launch its cards in the world’s second-largest economy,” Khalil told BTR during an interview.

Exceeding Targets

Khalil, an industry veteran with 20 years of experience in tech, banking, consulting and the payments industry, said Mastercard is committed to building an innovative, inclusive and sustainable future. The technology giant provides a range of options to its cardholders to perform their transactions, including e-commerce payments, cross-border remittances, QR and Tap on Phone solutions.

Khalil noted that Mastercard’s goal is to bring one billion unbanked and underserved individuals and 50 million micro, small and medium enterprises (MSMEs) worldwide into the digital economy by 2025.

“An integral part of this objective is empowering 25 million women entrepreneurs with the tools and resources needed to grow their businesses. Remarkably, we already achieved this global milestone ahead of schedule in June 2023,” he said.

2023 – A historic year

Khalil described 2023 as a historic year for the company, marked by tremendous growth as well as expansion into new territories with its state-of-the-art solutions.

“2023 was a fantastic year for us, as we registered amazing growth in our business in this region. We also finalised our platform in China to become the first global company that will launch its cards in the world’s second-largest economy,” he said.

“We are not just an international player, but we have a lot of assets in our arsenal. We’re not scared to go the extra mile in finding new scale opportunities,” he added.

“We still have a lot of innovative ideas and will carry on our financial inclusion journey. Looking ahead to 2024, 2025 and beyond, the outlook is extremely positive, as we are energised, and our partners are very happy to continue working with us to innovate for the future. The sky really is the limit.”

Innovation-LED Partnerships

“Partnership is the name of the game. Working closely with key ecosystem players allows us to amplify each other’s innovation capabilities to keep up with the evolving needs of their customers,” said Khalil.

A case in point is the company’s latest long-term strategic collaboration with First Abu Dhabi Bank (FAB), aimed at leveraging advanced technologies, including AI, to develop unique and disruptive products, services and solutions as one unified team.

The groundbreaking partnership unlocks new ways of working that will enable closer day-to-day collaboration and a shared focus on long-term growth.

Key Growth Markets

Khalil highlighted key growth markets in the MENA and Pakistan region, and said Mastercard has been involved in many large-scale collaborations to drive accelerated growth and innovation in the UAE and other countries.

He observed strong progress in terms of digital transformation in the UAE, Saudi Arabia, Egypt and Pakistan, and pointed out an interesting factor Mastercard has identified.

“We’ve noticed that different markets grow with different technologies and different use cases. For instance, in Pakistan, there’s a huge growth in cybersecurity. Because the economy is transforming so quickly into the digital space, we see a lot of uptake of cybersecurity assets and solutions,” he said.

But there’s also growth in cross-border payments on the SME side and high acceptance among the masses, he said, adding that significant growth is being recorded in the number of merchants accepting digital payments across the country.

MENA Takes The LEAD

In the UAE (and Saudi Arabia), Khalil has seen considerable growth in e-commerce and cross-border payments.

“Four or five years ago, a lot of the cross-border payments out of the UAE were related to travel corridors, but today, they are a mix of travel, e-commerce, services and experience-related spends,” he said.

In Egypt, he has observed rapid growth in the mobile payment segment.

“We have a mobile payment gateway platform in the country that is growing in leaps and bounds, and we see it connect more people to the digital economy going forward,” he added.

Fast-Tracking Tech Adoption

Khalil noted that the rest of the region is growing on the domestic side of the equation.

“You’ll see a lot of growth in domestic payments in markets like Qatar and Kuwait. We still believe that there’s an upside for them to recover from the Covid-19 pandemic,” he said. “So, it’s been a mixed bag – in different markets, different kinds of use cases and technologies are solving for different problems in people’s lives.”

“I think we’re blessed in this region to be seeing so many innovations and changes in the digital payment space. The UAE, Saudi Arabia, and now Egypt, Pakistan and many other countries are defining the new face of digital payments, and we’re taking the lead in embracing new technologies,” he added.

Khalil said Mastercard has been working with its partners, merchants and regulators to explore new types of digital payments, such as contactless, invisible and seamless payments, as well as cybersecurity to protect customers’ interest.

“We’ve also got new payment options, including ‘buy now pay later’ (BNPL), and are keeping an eye on alternative payments and cross-border payments, which have registered huge growth in recent years,” he added.

SMES In The Spotlight

Referring to the vision of Mastercard’s CEO, Khalil outlined target areas for the global technology company in the payment industry in the coming years. “We’re looking very closely at the small and medium enterprise (SME) and business-to-business (B2B) segments, which see a lot of positive disruptions that will help accelerate growth in the commercial payment space,” he said.

He added that SMEs are the lifeblood of communities and economies in most countries, and highlighted Mastercard’s partnerships in the UAE, Saudi Arabia, Egypt and Pakistan that support small businesses.

“We think it’s extremely important to empower SMEs. When you give them better access to technologies, products and financial services, you improve the lives of not just the SME owners but also everyone that benefits around them,” he said.

A Primary Technology Provider

Khalil said Mastercard is well-equipped to cope with technology challenges while operating in key growth markets. The company provides relevant and targeted solutions because of its innovative approach and investment in the latest technologies, including fintech, artificial intelligence (AI), cybersecurity and data analytics.

Mastercard offers different kinds of technologies and facilitates different kinds of payments – physical, online, e-commerce, digital, contactless and cross-border remittance.

“Mastercard has solutions that are working today and helping power these new flows and new use cases. And because of that, we were able to become the primary technology partner for many banks and other ecosystem players, but also merchants, who appreciate our one-stop-shop approach,” he said. “In addition, we play a big role in helping de-risk our partners and participants in the digital economy by providing them with a comprehensive portfolio of cybersecurity services, many of which have been built in within their organisations.”

Keeping Pace With Tech Trends

Khalil believes technology and innovation are essential to ensure sustained success as businesses and financial institutions around the world are confronted with new and unprecedented challenges.

“With investment in innovative ideas, we are able to empower our clients and partners with the tools to meet their targets and accomplish their goals. And technology plays an important role in developing an innovative range of solutions for the payment industry, cybersecurity and digital economy,” he said.

The Power Of Fintech

The Mastercard executive also shed light on the latest fintech trends that have revolutionised the financial sector in recent years.

“It is good to see that investor sentiment is supporting the growing fintech sector that shifts focus from business-to-consumer (B2C) to B2B as it helps digitise e-commerce and provide new ways to distribute financial products and services to various players,” he said. “There’s a plethora of new trends, and they’re all positive. And we’re really happy with the way that participants as well as regulators are coming together to usher in this new era of digital payments and digital commerce.”

Future Of Cryptocurrency

Khalil believes cryptocurrency will take time to establish itself as a “trustworthy tool to exchange value”.

“Crypto is not going to change the world tomorrow. It’s just going to be another technology, another way to exchange value. It still is intrinsically quite volatile, as you probably see from the markets today,” he said. “At Mastercard, we are helping make crypto accessible and secure for consumers, businesses and governments. Our Crypto Card Program, as an example, enables simple and real-time use of digital currency for everyday transactions.”

Blockchain As A Catalyst

Khalil termed blockchain an interesting technology and catalyst for e-commerce growth across the world.

“Blockchain is an enabling technology that we have invested quite a bit in, as we have more than 100 patents in this space globally. It means that we had intentionally sought to explore this technology and understand how it can catalyse growth for the e-commerce sector and other industries,” he said.

The Potential of AI

In terms of AI and its usage in the payment industry and cybersecurity, Khalil noted that Mastercard leverages the technology to increase efficiency, productivity, transparency and customer happiness.

“We’ve been investing in developing AI for the last decade and a half. We are keen to use the technology to revolutionalise customer experience and enhance cybersecurity, in addition to making our HR, finance and legal departments more efficient and transparent,” he said.

“Banks are still experimenting with AI internally. They are building generative AI capabilities, testing the technology and learning it on basic processes, as they don’t want to expose their customers to fraud,” he added.

Khalil praised the UAE government for its ambitious approach to AI, and said Mastercard is ready to accelerate AI adoption in the region through its Global Center for Advanced AI and Cyber Technology in Dubai.

“We realised that the government accords top priority to the technology, as evidenced by its appointment of a dedicated minister for AI. That’s why we decided to establish one of only a handful of Global Centers for Advanced AI and Cyber Technology in the UAE, with the other Centers located in the US, Canada and India,” he said.

Mobile Payments Driving Inclusion

Khalil noted that mobile payments are gaining ground in Africa and Pakistan, and Mastercard collaborates with key telecom players in the region to capitalise on business opportunities in this growing segment.

“Telcos are incrementally becoming very important constituents in our financial ecosystem. I think telecommunication companies are also going through this kind of transformation where they’ve been talking about mobile financial services. Now we’re seeing more adoption and value realisation happening in the market,” he said.

“We have a partnership with MTN Group in Africa to connect millions of people and small businesses across the continent to digital tools to transact through secure mobile payments, expanding access to the benefits of the digital economy,” he added.

Africa is home to over 1.3 billion people, and only about 43 per cent are banked, with over 90 per cent of all transactions made in cash. And of the total population, only 45 per cent have mobile money accounts, according to the latest research.

“In Egypt, we already have been operating a mobile payment gateway, which connects all the telcos and helps people to transfer money instantly,” said Khalil.

In collaboration with the Central Bank of Egypt and the Egyptian Banks Company – the advanced payments network and domestic operator in the North African country – Mastercard supported the implementation of card tokenisation regulations by providing infrastructure to issuing banks across the country. The platform is expected to be launched this year.

Building A Sustainable Future

Khalil noted that Mastercard supports all Sustainable Development Goals (SDGs) and is among the leading businesses pushing for a more environmentally sustainable future.

The technology giant is committed to driving its operations toward net-zero emissions by 2040 and accelerating the transition to a low-carbon and regenerative economy across the board. The company has united global efforts to address climate change through the Priceless Planet Coalition, which seeks to restore 100 million trees by 2025.

“Mastercard supports the UAE’s drive to restore and expand mangrove forests and other coastal ecosystems with the aim of planting 100 million mangroves by 2030. We work to raise awareness about the important role mangroves play in preserving our climate,” said Khalil.

“In collaboration with Abu Dhabi Commercial Bank (ADCB), we also introduced the region’s first Mastercard Carbon Calculator to support the sustainability ambitions of businesses by providing data on the estimated carbon footprint of their corporate expenditure using ADCB corporate cards,” he added.

The innovative tool assesses the number of emissions generated by each purchase using a weighted calculation powered by the independently verified Doconomy Åland Index, encouraging environmentally conscious consumer behaviour.

“This move aligns with the UAE’s ambition towards net-zero emissions by 2050 as well as global sustainability goals. We also backed the country’s initiatives to address global environmental challenges, announced at the landmark COP28 conference,” he said.

Khalil explained that as part of its holistic environmental, social and governance (ESG) approach, Mastercard supports diversity to provide equal opportunities at all levels of the company and harness a wider range of skills and experience for greater innovation and impact. Achieving the company’s ESG goals is also factored into bonus calculations for all employees. “Our diversity ratios significantly exceed regional benchmarks. Providing an optimal work environment to our employees and taking care of their wellbeing is high on our agenda,” Khalil concluded.