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PayPal eyes double-digit share of Middle East e-commerce

By Matt Smith

DUBAI (Reuters) - PayPal aims to double its share of Middle East and North African e-commerce within three years after enabling customers in seven of the region's countries to open accounts linked to locally issued bank cards.

The online payment pioneer owned by eBay Inc has one million customers in the Middle East and North Africa (MENA), about half of whom are in the United Arab Emirates (UAE), but they previously needed a credit or debit card issued in other regions, executives said at a news conference on Wednesday.

Now residents of Saudi Arabia, the UAE, Bahrain, Kuwait, Qatar, Oman and Jordan can link a PayPal account to locally issued Visa, MasterCard or American Express credit or debit cards, with PayPal planning to expand this to nearby countries.

The company also announced a partnership with Dubai-based courier Aramex that will allow regional customers to ship goods home from the United States, Britain and China.

E-commerce in MENA is estimated to be worth $9 billion in 2012, and PayPal currently claims a 5 percent share of that. It aims to take its share to 10 percent within three years, said Elias Ghanem, managing director of PayPal MENA.

Most regional e-commerce spending is on goods sourced outside MENA, with only 15 percent of businesses within the region having an online presence.

"Today, consumers don't necessarily find everything they want here. As the market grows, merchants will build up better services and domestic and regional e-commerce will take over international e-commerce," Laurent Wakim, PayPal's head of MENA business development, told Reuters.

As well as recruiting more shoppers, PayPal also says it plans to enlist more MENA-based merchants.

"There's an opportunity to take this from the hundreds into the thousands," said Ghanem, adding that the company could eventually host 25,000 sellers from the region.

Regional e-commerce has lagged behind developed markets, but PayPal cited research forecasting business-to-consumer online sales in MENA will hit $15 billion by 2015.

Take-up has been slow, even though Qatar, the UAE and Kuwait are among the wealthiest countries in the world on a per capita basis. Consumers remain wary of paying for goods online and about 80 percent of regional e-commerce is via cash-on-delivery transactions.

"We believe we will be able to win a greater share in the market versus cash," Wakim said. "Why? Cash on delivery is not so convenient. On the merchant side, it's more expensive and it's a greater risk. For a buyer, you have to be home to pay when the guy delivers, otherwise you won't get the goods. Plus, many merchants will charge a specific fee."

The company is also planning to launch Arabic language services and aims to open a Dubai office in 2013. (Edited by Andrew Torchia and David Goodman)

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