Digital payments company Payfort, which is based in Dubai, is using local merchant networks and consumers' own homes to enable more travel payments.

Payfort is leveraging a pair of programs called PayatStore and PayatHome to enable people to pay and book hotel and airline trips without cards.

"It's our way of solving the low credit card penetration in the Arab world," says Omar Soudodi, a managing director at the Payfort, which also accepts MasterCard and Visa payments.

Consumers can use the PayatStore mobile app or website to initiate a payment. They then receive an electronic voucher that includes information about the purchase price, merchant name, expiration time and the third-party merchant, which is where the buyer must go to complete the payment.

The third-party merchant and hotel or airline, which are connected via Payfort's application programming interface, can then complete the payment and confirm the travel booking. Payfort manages the payments execution for the merchants, including risk management and compliance. Payfort has a network of about 25,000 retail locations in the Middle East that support PayatStore.

"It's a good product to reach the nonbanked consumer or a consumer that doesn't want to use a credit card," Soudodi says.

A separate product, PayatHome, works through local couriers, who visit the consumer's home to accept the payment on a smartphone or tablet. In most cases, this process takes about five hours to complete.

"If the courier doesn't have a handheld device, we give them one so the payee can be notified of the payment," Soudodi says.

Payfort is introducing PayatStore first in Egypt, with plans to introduce the service in the United Arab Emirates in the near future. "There's a good sized opportunity in Egypt for us," Soudodi says, adding his company has found that only about 9% of Egyptians have a credit card.

PayatHome for travel payments is launching in the United Arab Emirates, with Egypt and Saudi Arabia following.

The company has a variable fee structure that depends on the size of the transaction, Soudodi says. "The more a merchant gets for a payment, the more they pay," he says. The company also negotiates a fee structure with issuers for card payments.

The third-party payment model is also used in other countries, including the U.S. Nortridge, for example, recently partnered with PayNearMe to allow borrowers to make payments at 7-Eleven and ACE Cash Express stores, reducing the risk lenders would face in accepting cash payments at their own locations.

Nortridge customers send PayNearMe bar codes and payment instructions as emails or text messages to borrowers. To make cash payments, borrowers bring the bar code to a participating store and pay at the register. Lenders then receive notification that the payment has been made.

After some early success with mobile money services in Africa, payment companies such as MasterCard and Visa are increasingly using mobile and online technology to enable financial services in other markets with low credit card adoption.

Other new payment initiatives in the Middle East include the United Emirates-based First Gulf Bank, which this week announced it would use Monitise's technology to offer mobile payments and other financial services in the region.

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