Economic Update

Several innovations in Jordan’s banking sector over the past two years have helped facilitate an increase in cashless transactions, including mobile payment services for bills, peer-to-peer lending for small businesses and other technology-enabled financial services.

Launching the platform

The Central Bank of Jordan (CBJ) paved the way for e-payments in 2014, when the eFAWATEERcom platform was launched.

The platform allows users to pay bills in real time via a range of electronic means, including ATMs, point-of-sale terminals, dedicated kiosks and online.

In addition to utilities, customers are able to pay for education and health care bills, as well as government fines and taxes. Users can also recharge pre-paid mobile phones.

The platform is owned by the CBJ and operated by e-payments firm Madfoo3atCom, which won a tender to build, operate and administer the e-billing system in early 2014. Madfoot3atCom is a seed investment of Oasis500, the Amman-based ICT start-up accelerator.

E-payment services are not just intended to ease the payment process, but to also reduce banking costs associated with cash collection and transport, and traditional paper-based transactions.

The growing availability of mobile payment services is part of a growing trend of increased uptake of other online transactions. According to MasterCard data, Jordan saw online purchases total $200m in 2014, a 30% increase from 2013.

Market opportunity

The spread of e-payments is welcome news for the country’s increasingly tech-savvy but under-banked population. About 86% of Jordan’s population are active internet users, while just 25% have bank accounts, according to local media reports.

As a result, there is limited access to credit lines for much of the population. This in turn places limits on entrepreneurship and consumer behaviour that so-called fintech solutions, which use innovative technology in financial services, are well placed to solve.

Online lending, crowdfunding, currency trading, mobile payments and other technology-enabled financial services, frequently referred to as fintech, are all on the rise.

E-wallets and pre-paid cards in particular have proven popular among Jordan’s unbanked population, as well as the country’s sizeable refugee population of 2.7m. Banks are working to roll out pre-paid cards and virtual accounts for this segment, allowing them to more easily manage transfers from government bodies and NGOs.

Additional services

Building on the success of eFAWATEERcom, other fintech services have also been developing in Jordan.

GreenWallet, a Jordanian start-up and another beneficiary of Oasis500, launched an online lending platform earlier this year that allows users to request and receive a loan in less than 15 minutes. The programme uses a scoring formula to assess the worthiness of borrowers, according to Ali Tabbalat, GreenWallet’s founder.

Another lending platform, liwwa, operates as a sharia-compliant crowdfunding outlet. Investors receive returns on a regularly scheduled basis using a lease-to-own structure, as opposed to the traditional equity model.

Peer-to-peer lending is especially promising for Jordanian small and medium-sized enterprises (SMEs), which have traditionally lacked access to conventional finance.

According to the 2011 census, roughly 98% of all companies in the kingdom are micro-enterprises or SMEs, employing some 71% of the private sector labour force – though this share dips to 31% once public sector workers are included in the total, according to OECD figures.

Moreover, SMEs account for upwards of 40% of Jordan’s nominal GDP, making access to finance for small businesses key to economic development.

Investors appear to be taking notice of the opportunities presented by the segment; liwwa received $2.3m in seed investment led by Silicon Badia with participation from DASH Ventures, Bank al Etihad and MENA Venture investments in late March. 

The broader Jordanian fintech landscape could also continue to benefit from the growing popularity of these types of ventures. According to media reports, fintech start-ups worldwide received a combined $12bn in investment in 2014, a three-fold year-on-year increase. In 2015 they attracted some $19.1bn, consultancy KPMG noted, with further growth prospects ahead.

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