As it did in many countries around the world, the COVID-19 pandemic accelerated the adoption of electronic payment systems in Jordan and catalyzed a major digital transformation among the country’s businesses.
For the company that operates Jordan’s main electronic payment systems, Jordan Payments and Clearing Company (JoPACC), that means the last two years have been critical.
Owned by the Central Bank of Jordan alongside its 22 commercial banks, JoPACC was established in 2017 to establish interbank payment networks and develop payment solutions for end users. The latest nationwide system set up by the company is the real-time payment scheme CliQ.
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When the pandemic arrived in Jordan, JoPACC was still testing CliQ, and as the company’s CEO, Maha Bahou, told PYMNTS in an interview, the whole process of connecting the infrastructure and rolling out the system nationwide took place at the height of the country’s lockdown.
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Out of the need to limit physical contact, the Jordanian government made a big push for digital payments in 2020 and started disbursing welfare payments electronically, further encouraging the adoption of digital wallets.
At the same time, smaller merchants that had previously relied on cash transactions found themselves obliged to embrace new payment methods or risk losing business, Bahou added.
And in partnership with the central bank, JoPACC found itself in the critical role of helping to equip these businesses with the tools needed to accept digital payments.
The combination of better infrastructure and rising adoption of electronic payments meant “an exponential increase in access to formal financial services took place,” and in the space of two years, there has been more than a 200% increase in the acceptance of electronic payments, per Bahou.
Today, 86% of locals who were obliged to deal with digital wallets or bank accounts in order to receive government aid intend to keep on using them even if they no longer have to, based on results from an annual market survey that JoPACC carries out.
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In another survey she referenced, the World Bank found that among the most vulnerable and poorest segments of Jordanian society, there was a 99% satisfaction rate with digital payment methods, even among people who are typically less inclined to embrace digital services.
JoPACC has also found that not only are more Jordanians adopting digital payment methods, but existing users are also increasing their usage. For Bahou, one of the most important factors in the country’s digitization is that people are choosing to keep their money in electronic form and cashing out less, contributing to greater “digital liquidity” within the ecosystem.
Payments: Frontier Towards More Financial Services
Of course, the pandemic presented challenges to Jordan that payments digitization alone can’t solve.
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Calling payments “the frontier towards more financial services,” Bahou said that Jordan was right to prioritize schemes like CliQ but now that the infrastructure has been laid, the next step will be to increase access to financial services that are “lagging behind.”
Foremost among these is access to credit and loans. She explained that although JoPACC can’t solve this problem alone, it is working closely with lenders to help integrate payment systems and ensure they have the means to disburse loans and receive repayments electronically.
In Jordan, that means supporting the microfinance institutions that are critical to keeping the country’s micro, small and medium-sized enterprises (MSMEs) running. And for the entrepreneurs that rely on microloans, Bahou said that being able to receive payments straight to their mobile wallet instead of having to travel and collect cash can have a “huge impact on their lives.”
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Another lesson that Jordan has learned from the pandemic is the importance of remote onboarding, Bahou noted.
Back in 2020, JoPACC and the Central Bank of Jordan were able to support people as they set up mobile wallets and opened bank accounts by implementing electronic Know Your Customer (eKYC) procedures and relaxing the rules for remote identity verification.
JoPACC has since continued to develop remote onboarding technology, and earlier this year, announced a partnership with the Advanced Company for Detection Systems (ACDS) to work on a new eKYC project.
As Bahou explains, the project, which is now in its final stages, will connect banks’ applications to government data sources to allow digital validation of identity documents while at the same time giving consumers control over who gets access to their data.
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