Dubai businesses embrace crypto as the future of payments

Short Url
Updated 01 May 2022

Dubai businesses embrace crypto as the future of payments

  • There is a possibility that the digital ecosystem in the UAE is set for bigger things

DUBAI: If you thought that the worldwide media coverage of Dubai’s new crypto laws announced in March was a blip on the radar screen, wait until you see the frenzy with which traditional shops and institutions are embracing digital currencies.

Close on the heels of several global crypto exchanges bagging commercial licenses and moving headquarters to Dubai, a motley mix of neighborhood establishments have opened its doors to people willing to lighten their wallets with bitcoin and the like.

Situated in Al-Quoz, Bake N More is a coffee and pastry shop that will go down in local history as the first cafe in Dubai to accept cryptocurrency from its customers. While the cafe still accepts cash and credit cards, it welcomes a mixed bag of digital payments, including Bitcoin, Ethereum and Tether.

“There’s been tremendous interest in cryptos because people see this as the future payment gateway system, especially those who have held on to them for a long time and are now looking to cash them,” Mohammad Al-Hammadi, owner of Bake N More, told Arab News.

The contemporary cafe’s open-source payment platform is handled by Mixin Network, a lightning-fast and decentralized platform that brings speed and scalability to blockchain and facilitates the transfer of digital assets.

Explaining the payment system to Arab News, Al-Hammadi said that it would charge customers by converting the cost of an item into its value in cryptocurrency. For instance, if a bottle of water costs 5 dirhams ($1.36), the price payable in TerraUSD, a Stablecoin built on the Terra blockchain, would be about 1.36UST as it is pegged 1:1 against the US dollar.




Mohammad Al-Hammadi, owner of Bake N More

New school of thought

The emergence of cryptocurrency as a mainstream tender has also invited the attention of Citizens School, an educational institution situated in the plush Al-Satwa locality. Come September, the UK-curriculum non-selective school will let parents pay the tuition fees in Bitcoin
and Ethereum.

“The reason we are accepting crypto payments is to start a conversation among parents and children about the technology that will influence the lives of the young generations,” said Hisham Hodroge, CEO of Citizens School.

He further added that nearly 10 percent of the parents who have enrolled their children opted to pay in cryptocurrency. The 43,000 sq. m. school campus has a capacity for 2,600 children, and fees range from 36,000 dirhams for Early Years Foundation Stage 1 up to 52,000 dirhams for Year 6.

HIGHLIGHTS

• Situated in Al-Quoz, Bake N More is a coffee and pastry shop that will go down in local history as the first cafe in Dubai to accept cryptocurrency from its customers. While the cafe still accepts cash and credit cards, it welcomes a mixed bag of digital payments, including Bitcoin, Ethereum and Tether.

• The contemporary cafe’s open-source payment platform is handled by Mixin Network, a lightning-fast and decentralized platform that brings speed and scalability to blockchain and facilitates the transfer of digital assets.

• The emergence of cryptocurrency as a mainstream tender has also invited the attention of Citizens School, an educational institution situated in the plush Al-Satwa locality.

“A while ago, cryptocurrency was only a floating term among well-versed investors. However, today cryptocurrency is becoming much more mainstream, reshaping the traditional financial system,” said Adil Alzarooni, founder of Citizens School, in a statement.

Not too long ago, even investment circles barely knew about the dark alleys of the deep web, the seedy corner of the Internet that offers anything from criminal services to cracked credentials to counterfeit money for instant exchange of cryptocurrency.

But the instrument soon gained legitimacy when the investment community began counting on it to hedge risk against rising inflation. The outcome was bizarre because it led to an exponential rally that led Bitcoin to touch a dizzying height of over $68,000 in November 2021. Just five years ago, a single Bitcoin was worth about $700. The meteoric rise became a talking point across the treasury benches globally.




Hisham Hodroge, CEO of Citizens School

Crypto penetration in UAE

According to blockchain data platform Chainalysis, the UAE, estimated to be the third-largest crypto market in the Middle East after Turkey and Lebanon, totaled a transaction value of $26 billion between July 2020 and June 2021. Sovereign governments were left with no choice but to reign over the volatility and tame the beast.

Early this year, the UAE announced a licensing program that would bring it into the league of rival financial centers such as Singapore and Hong Kong.

Last month, the state passed its first crypto law and established a regulatory body to oversee virtual assets.

The government set up the Dubai Virtual Assets Regulatory Authority to oversee the regulation, governance and licensing of cryptocurrencies, non-fungible tokens and other virtual assets. The decision led to a massive influx of global crypto exchanges in the region.

Cryptocurrency exchange Bybit announced its plans to move its headquarters from Singapore to Dubai. Global behemoths such as FTX and Binance received licenses to operate in the city. Crypto.com has revealed its intention to set up its regional office in the city.

“Countries like the UAE have already created governing bodies to measure and promote the growth of virtual assets. It’s keeping itself ahead of most of the world in developing the crypto market,” said Emma McInnes, global sector head of financial services at YouGov, a UK-based market research and data analytics firm.

YouGov recently released a report titled “The Future of Financial Services” based on the sample size of 1,012 in the UAE. The study revealed that 67 percent of UAE residents were interested in investing in cryptocurrencies within the next five years, and 21 percent intended to trade in the next 12 months.

“Like all businesses started using the Internet 20 years ago, they will start using crypto now; it is inevitable,” said Talal Tabbaa, CEO of CoinMENA, a digital assets exchange licensed by the Central Bank of Bahrain.

Salaries in Crypto?

The company recently set up a payment platform for Dubai-based online convenience store Yalla Market that claims to deliver groceries in 15 minutes. The store accepts USD Coin and Tether. What makes the store interesting is that besides launching a new payment method for its customers, the startup is also considering paying salaries via digital assets in the future.

“We can now see that the world is increasingly adopting blockchain and cryptocurrency technologies. We could not stand aside as a company based in the UAE,” said Leo Dovbenko, CEO and co-founder of Yalla Market, in a statement.

The message is loud and clear: Crypto is here to stay, but there is a strong possibility that the crypto ecosystem in the UAE is set for bigger things. However, that is a story for another day.

Related


Saudi banks shut down 42 branches in 12 months, increase digital presence

Updated 9 sec ago

Saudi banks shut down 42 branches in 12 months, increase digital presence

  • More banks are switching to increased virtual interactions and digitalization, and new banks are opening entirely on that premise

CAIRO: Saudi banks shut down 42 branches over the year ending in June, revealed the Saudi Central Bank, also known as SAMA.

The number of bank branches in Saudi Arabia also inched lower to 1,927 in the second quarter this year from 1,932 in the same quarter last year.

So, what are the reasons behind this decreased number of bank branches, and when did this trend begin?

The most common assumption would be the COVID-19 pandemic and its prolonged effect on the entire economy, including the financial and banking sectors.

Between the fourth quarter of 2019 and the first quarter of 2021, which includes the peak of the pandemic, 68 branches were closed. 

Also, bank branches continued to decrease quarterly long after lifting COVID-19 restrictions, albeit there was no clear trend.

Between May 2020 and June this year, 137 bank branches in the Kingdom shut shop.

It is worth mentioning that branches that have closed are not second-tier or underperforming banks but some of the largest and well-performing ones. For instance, Al Rajhi Bank, which had 543 branches in the fourth quarter of 2020, reduced it to 515 by June this year.

While COVID-19 sparked the digital revolution, advanced and innovative technologies did the job.

The past three years of the pandemic slowly began the transformation toward digital banking, which can be seen closely in the Saudi banking sector.

More banks are switching to increased virtual interactions and digitalization, and new banks are opening entirely on that premise.

Last February, SAMA licensed and welcomed the Kingdom’s third digital bank D360 Bank, following the launch of STC and Saudi Digital Bank in June last year.

Similarly, according to SAMA, 19 Saudi fintech companies have been authorized to provide payment services, consumer microfinance and electronic insurance brokerage over the past few months.

So, what does the future of digital banking in the Kingdom hold and will the population accept this digital revolution?

In a survey conducted by Ipsos in the Kingdom in October 2021, the research major pointed out that 61 percent still trust traditional banks, while 47 percent counted on mobile service providers and 40 percent depended on popular digital brands to carry out financial transactions.

The report added: “63 percent said that they will be making all their financial transactions through digital banking in the future, and 58 percent believe that people would no longer use cash as a payment method.”


Saudi banks increase loans by $77.1bn in Q2

Updated 14 August 2022

Saudi banks increase loans by $77.1bn in Q2

  • Kingdom is moving toward Vision 2030 by developing the trade sector and ensuring its sustainability

CAIRO: Saudi Arabia’s bank loan portfolio rose by SR289 billion ($77.1 billion) in the second quarter of this year from the same quarter a year ago, according to a recent statistical bulletin released by the Saudi Central Bank, also known as SAMA.

Bank loans totaled SR2.42 trillion at the end of the second quarter of 2022, up from SR1.95 trillion in the second quarter of 2021, showed the SAMA report.

The SR289 billion increase was led by an SR191.1 billion growth in miscellaneous activities. Its share increased by 2 percentage points to 52 percent in the second quarter of 2022.

The data showed that the value of Saudi banks’ aggregate loan portfolio totaled SR2.24 trillion at the end of the second quarter of 2022, up 14.8 percent from the year before and up 4 percent from the previous quarter.

The annual growth in bank loans dropped to a negative in 2017 and remained below zero until the third quarter of 2018. However, bank loans have been seeing an upward trend ever since, according to the SAMA report.

From the third quarter of 2018 until the end of 2019, the value of Saudi bank loans grew at an average rate of 3.7 percent year on year; between 2020 and the second quarter of this year, it grew at an average rate of 14.8 percent year on year.

The dominating segment in the Kingdom’s loans was miscellaneous economic activity, which acquired 52 percent of the total loans this quarter.

Commerce came in second, holding 17.2 percent of total loans in the country, recording SR385.7 billion in the second quarter, showed the data.

The Ministry of Commerce in the Kingdom has been moving toward the Saudi Vision 2030 by developing the trade sector and ensuring its sustainability, according to the Kingdom’s Unified National Platform.

The platform stated: “The Ministry of Commerce’s mission focuses on improving the business environment in Saudi Arabia through enacting, developing and supervising the implementation of flexible and fair trade policies and regulations.”

Even though total bank loans expanded this quarter, two economic activities saw a quarterly decline in bank credit in the second quarter of this year: manufacturing and processing and transport and communication.

Bank loans to transport and communication fell by SR6.2 billion in the second quarter of 2022 from the same quarter the previous year.

Compared to the previous quarter, the sector dropped from 2.1 percent of total loans in the first quarter to 1.9 percent, showed the SAMA bulletin.

Bank loans given to manufacturing and processing fell by SR4 billion in the second quarter of 2022 from the same quarter the previous year.

The data showed that the sector dropped from 7.2 percent of total loans in the first quarter to 6.9 percent compared to the previous quarter.

Related


QS Monitor taps 90% of global food trade

Updated 15 August 2022

QS Monitor taps 90% of global food trade

  • Platform currently operates in 72 countries: Managing director Burak Karapinar

RIYADH: UAE-based global food trade startup QS Monitor has created a platform for food traders to ship their goods risk-free.

Established in 2020, the company mitigates the risk for exporters as they streamline their shipments to avoid food loss by providing traders with the requirements for their goods to pass security measures.

Burak Karapinar, the managing director and founder of QS Monitor, told Arab News that the platform currently operates in 72 countries, which amounts to almost 90 percent of the global food trade industry.

“We are in 72 countries and growing, but this represents almost 90 percent of the global food trade. So, the ones we don’t have on the platform right now are either small countries or ones that are not big in the food trade,” Karapinar said.

Calling it the “Google for food trade,” Karapinar explained that traders input the product along with the destination, and QS Monitor will provide a complete list of requirements.

But that is not at all. Joe Hawayek, the board member of QS Monitor, told Arab News that the platform also links users to testing laboratories in their country.

“We are linking them with a testing laboratory in their country that can conduct these tests, issue them with the relevant certification that says they have passed, and they take it and travel with it for their product from the start,” he added.

By linking these players, Karapinar is trying to mitigate the food loss in the supply chain caused due to contamination. 

FASTFACTS

• As the Ukraine-Russia war affected the global food trade sector, the company plays a huge role in ensuring importers are still connected with exporters.

• Saudi Arabia and the UAE import most of their eggs from Ukraine, and because of the platform, importers could find alternative sources for their products.

“To give you an idea, 72 percent of global food loss happens in the supply chain, not at home or on the consumer’s plate,” he pointed out.

As the Ukraine-Russia war affected the global food trade sector, the company plays a huge role in ensuring importers are still connected with exporters.

“That’s another beauty that we can provide to this platform. The onboarding of a supplier takes months. You need to be able to verify all the information and make sure the supplier meets your criteria and standards.

“Through our platform, you don’t need to do that. You can gather this information. And you can make your decision. So, we also add the trust element between the buyer and the seller,” Karapinar said.

Hawayek also added that Saudi Arabia and the UAE import most of their eggs from Ukraine, and because of the platform, importers could find alternative sources for their products. With a network of over 400 laboratories, the company provides several services through its platform and certification for Halal requirements for certain foods.

“We did more than 10,000 transactions last year; this includes certification testing, inspection, product registration, and supplier audits,” Karapinar added.

With 6,000 traders on the platform, Karapinar stated that the company currently has 1,000 traders on QS Monitor from the Kingdom and is planning to grow that number by a minimum of five times.

In addition, the company is currently in series A funding stage and is on its way to raising $8 million and expanding its staff from 18 to 60 people in the next five months.

QS Monitor also won UAE’s FoodTech Challenge provided by the Ministry of Climate Change and Environment, which features almost 600 companies.

Related


Gazprom ramps up gas flow to Hungary via Turkstream pipeline, official says

Updated 13 August 2022

Gazprom ramps up gas flow to Hungary via Turkstream pipeline, official says

  • The agreement with Gazprom is for 15 years, with an option to modify purchased quantities after 10 years

BUDAPEST: Russia’s Gazprom has ramped up flows to Hungary via the Turkstream pipeline that brings gas to Hungary via Serbia, a Hungarian Foreign Ministry official said on Saturday.

EU member Hungary has maintained what it calls pragmatic relations with Moscow since Russia’s invasion of Ukraine, creating tensions with some EU allies keen to take a tougher line.

Hungary, which is about 85 percent dependent on Russian gas, firmly opposes the idea of any EU sanctions on Russian gas imports and Prime Minister Viktor Orban has also lobbied hard to secure an exemption from EU sanctions on Russian crude oil imports.

Foreign Minister Peter Szijjarto met his Russian counterpart Sergei Lavrov in Moscow last month, seeking a further 700 million cubic meters of gas on top of an existing long-term supply deal with Russia.

Under a subsequent agreement, Gazprom started ramping up gas flows to Hungary on Friday, Hungarian Foreign Ministry State Secretary Tamas Menczer said in a statement.

Menczer said Gazprom would add 2.6 million cubic meters of additional gas per day to previously-agreed deliveries via Turkstream through August, with the amount of September deliveries being negotiated.

Hungary’s reserves stored 2.84 billion cubic meters of gas by the middle of July, the lowest level for that period over the past five years based on data by the national energy regulator.

Under a deal signed last year, before the start of the war in neighboring Ukraine, Hungary receives 3.5 billion cubic meters of gas per year via Bulgaria and Serbia under its long-term deal with Russia and a further 1 bcm via a pipeline from Austria.

The agreement with Gazprom is for 15 years, with an option to modify purchased quantities after 10 years.

Related


Arab News top picks of MENA’s 10 most funded fintech startups

Updated 15 August 2022

Arab News top picks of MENA’s 10 most funded fintech startups

  • Technology-based sectors starting to dominate the business landscape in the region

RIYADH: The entrepreneurial ecosystem has been on the rise in the Middle East and North Africa region for a while, with technology-based sectors starting to dominate the business landscape.

Financial technology, popularly known as fintech, has been a promising sector for business people and investors alike, with startups entering and exiting the industry like never before.

The numbers speak for themselves. Startup funding increased 540 percent in the first quarter of 2022 compared to the same time last year, reported Dubai-based MAGNiTT, a startup research platform.

To get a sense of the action in the fintech domain, Arab News has compiled a list of the 10 most funded fintech startups in the MENA region.

 

Tabby

Founders Hosam Arab, Daniil Barkalov

Funding $275 million

Rounds 8

Investors 19 investors including STV, Global Founders Capital, Raed Ventures, Partners for Growth, Atalaya Capital.

Headquarters UAE

One of the leading buy-now-pay-later platforms in the region, Tabby aims to provide financial freedom to shoppers by offering solutions without interest or debt fees.

Focusing on the retail sector, the company wants to improve the shopping experience of its loyal customers by offering a flexible checkout experience.

Tabby raised $150 million in debt financing in its last funding round and it aims to use it to fortify its balance sheet as well as strengthen its client base.


Foodics

Founders Ahmad Al-Zaini, Musab Al-Othmani

Funding $198 million

Rounds: 5

Investors 17 investors including STV, Sanabil and Prosus

Headquarters Saudi Arabia

Foodics offers a point-of-sale management system for restaurants that lets business owners keep track of all their operations, from the kitchen to employees and sales.

The company offers many facilities that support restaurant operations, including micro-lending and payments catering to food and beverage establishments.

In its latest funding round, Foodics secured $170 million in a series C round, allowing it to grow its fintech arm and micro-lending operations.

 

 


Tamara

Founder Abdulmohsen Al-babtain, Abdulmajeed Al-sukhan, Turki Bin Zarah

Funding $116 million

Rounds 4

Investors 9 investors including Impact46, CheckOut.com and Nama Ventures

Headquarters Saudi Arabia

Another pioneer in the buy-now-pay-later market, Tamara is a Saudi-based fintech that offers its solutions to merchants and buyers alike.

The company aims to create a seamless experience for shoppers by providing a zero-interest fee for its services.

In 2021, Tamara raised $110 million in a series A round, making it a record-breaking round last year.


Paymob

Founder Islam Shawky, Alain El-Hajj, Mostafa Menessy

Funding $68.5 million

Rounds 4

Investors 10 including PayPal Ventures, Nclude and A15

Headquarters Egypt

Paymob, one of the players that changed the game in the Egyptian market, is a complete fintech solution for emerging markets and small and medium enterprises.

The company offers a complete digital payment solution for businesses to accept online and in-store payments.

Founded in 2015, Paymob raised $50 million in a series B funding round in May 2022, which was used in product development and market expansion. 

Ahmad Al-Zaini, the co-Founder and CEO of Foodics, a Riyadh-based startup which helps food outlets with their digital transformation. (Supplied)

PostPay

Founder Tariq Sheikh

Funding $63.5 million, according to Forbes

Rounds Undisclosed

Investors Touch Ventures and AfterPay

Headquarters UAE

Founded in 2019, Postpay is a flexible payment firm that offers shoppers to pay in three monthly interest-free installments at its partner stores.

The company works with leading global brands such as H&M, Footlocker, Dermalogica and domestic merchants such as The Entertainer and Squat Wolf.

Last June, the company secured $10 million in equity investment; the funds will be used to fuel its expansion plans across the MENA region.


HyperPay

Founder Muhannad Ebwini

Funding $50.5 million

Rounds 4

Investors 8 including Mastercard and AB Ventures

Headquarters Saudi Arabia

HyperPay offers a payment gateway for online businesses to accept and manage
payments online with flexibility and security.

Founded in 2014, the company has an extensive network of partners with banks across the Middle East and North Africa to better facilitate online payments in local currencies.

In its last funding round, HyperPay secured $36.7 million in June 2022 to enable the company to grow its team and introduce new payment solutions. 


Khazna

Founder Omar Saleh, Ahmed Wagueeh, Fatma Shenawy

Funding $47 million

Rounds 7

Investors 12 including Quona Capital, Khawazimi Ventures and Nclude

Headquarters Egypt

Another Egyptian fintech startup that tops the list, Khazna, is a financial super app that offers a wide range of solutions for underserved individuals.

The company aims to provide
the 20 million underserved Egyptians with banking and financial options through their smartphones.

Founded in 2019, the company raised $38 million in March 2022, allowing it to replace cash-driven alternatives across Egypt.


BitOasis

Founder Daniel Robenek, Ola Doudin

Funding $30 million

Rounds 6

Investors 15 including Wamda and Jump Capital

Headquarters UAE

A new kind of fintech added to the list, BitOasis is a cryptocurrency trading platform that offers a digital asset wallet.

Founded in 2015, the company allows users to buy, sell, trade and exchange crypto assets in the UAE.

Raising $30 million in its last funding round, BitOasis got approvals from the Abu Dhabi General Market and partnered with police entities to combat crypto fraud.


Telr

Founder Khalil Alami

Funding $28.9 million

Round 4

Investors 4 including Cashfree Payments and iMena Group

Headquarters UAE

An award-winning payment gateway provider, Telr has offices in Singapore, the UAE, India, and Saudi Arabia.

The company offers businesses a set of application programming interfaces and tools to enable them to accept and manage online payments.

Telr raised $15 million in a funding round in 2021 by India-based Cashfree payments to better facilitate cross-border payments.


Paytabs

Founder Abdulaziz Al Jouf

Funding $25.3 million

Rounds 2

Investors Saudi Aramco

Headquarters Saudi Arabia

Another award-winning startup, Paytabs, is a B2B online payments solutions provider that aims to give merchants digital payment features on their websites.

The company offers application programming interfaces to facilitate transactions in multiple currencies and other markets.

Founded in 2014, Paytabs is a Saudi Aramco-backed company that currently operates in the UAE, Saudi Arabia and Egypt.

Related