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How money moves

How money moves in Lebanon

Written by

George Davis

on

Oct 4, 2023

/

How money moves

How money moves in Lebanon

Written by

George Davis

on

Oct 4, 2023

/

How money moves

How money moves in Lebanon

Written by

George Davis

on

Dec 13, 2023

How money moves: LBN
How money moves: LBN
How money moves: LBN

The short version

Lebanon is the meeting point between East and West and a unique market for payments. The past few years have been challenging with political and financial instability, however the country is moving forward towards a stronger, innovative economy.

The long version

Along the Mediterranean Sea and nestled between Syria, Israel and Jordan is the heart of our focus this week: Lebanon. Known as the Pearl of the Middle East, it is the only Arab country that does not have any desert. For many, it’s the meeting point of East and West in terms of geography and culture. A unique multilingual population speaking a hybrid of Lebanese Arabic, French and English.

There is no denying the financial and political challenges that Lebanon has faced over the past few years. Since 1997, the Lebanese Lira (LBP) has been pegged at 1,500 to the US dollar (USD). This dramatically changed in 2019 with the onset of the financial crisis in the country. Sparked by high government debt, and “financial engineering” without sufficient reforms, Lebanon’s GDP and currency dipped by 40% and 98% respectively.  Much like the rest of the world, the economy was further pressured downwards in 2020 by lockdown as much economic activity halted to curb the spread of Covid.

Despite this, Lebanon’s remittance market remains one of the highest in MENA, behind Morocco and Egypt. The fourth quarter of 2022 saw a market value of $1160 million for inbound remittances. The year ended with the remittance market attributing 37.8% of the Lebanese GDP. A recent study by Mercy Corps showed that remittances support 32% of Lebanese households to meet their basic monthly needs - such as food, rent and electricity -  as the cost of living continues to rise. A strong tell that the generosity of the Lebanese diaspora is an important contributor to the country’s efforts to rebuild the socio-economic landscape.

However the cost to remit funds (10.8%) is high relative to the global average (6%). In 2021, 70% of remittances were collected in cash while only 30% in bank transfer. Mastercard partnered with Credit Libanais to enable affordable inbound remittances to flow through direct bank transfers, helping to modernise the market through fast and secure transactions as well as leverage their global network for processing USD in December last year. Fintech app Purpl went live in Lebanon earlier this year, in partnership with local bank, Banque Libano-Française (BLF). Purpl secured its central bank licences to operate their cash out solution, which allows the diaspora to send funds into Lebanon. Beneficiaries can withdraw USD at ATMs, without a card or bank account requirement, and with zero fees.

Lebanon is a popular tourist destination - from beach clubs, Beirut nightlife to winter sports at the Mzaar Kfardebian (the Middle East’s largest ski area). In 2020, it was voted the Top Emerging destination by Travel Lemming, described as “the sort of place where the past, present, and future seemingly converge at once. It's a place influenced by countless cultures over millennia”. It’s no surprise that the 2023 tourism number has risen by 25.91% year-on-year, to just over 2.2 million tourists and generating about $9 billion in revenue for the country. Of this number, 75% are made up of the Lebanese diaspora returning home and the other 25% are foreigners (predominantly from other MENA countries). This definite tourism boom contrasts with the difficult economic picture of recent years, showing the determination and opportunity for Lebanon to regain its stride.

A quick look at the Lebanese demographic data shows that the median age is 28.8 years for the population of just over 5.3 million for 2023. The bulk of the population is urbanised at 96.6% in the three largest cities - Beirut, Ra's Bayrut and Tripoli. Millennials (the largest generational group in Lebanon) show a strong lean towards viewing themselves as global citizens, engaged with world news and latest tech. Their increased consumption of tech means they are using lifestyle digital services to boost convenience and connectivity. For example, a 2019 Ipsos report confirmed 62% of Millennials enjoy food delivery apps, 34% use ride hailing apps and 70% shop online. 

Pivoting to payments, we see a common Middle Eastern picture emerge for Lebanon, with cash being a dominant player. 

  • Cash is estimated at $9.8 billion in 2022 at 45.7% of the GDP according to the latest World Bank report. Given the currency challenges, the market has adapted to a dollarized cash economy, with Byblos Bank Chief Economist noting “dollars accounting for approximately 70-80% of operations”. 

  • With the move to a digital economy led by the young population, the demand for modern payment methods is clear. The card payments market is developing with the support of local banks which are keenly focused on tech infrastructure to enable these transactions. Visa is the major local card network company followed by Mastercard and American Express.

  • E-wallets were legalised in 2020 in line with Banque Du Liban’s (BDL) intention to help move the economy away from the heavy cash reliant model. Providing over 14000 payment point-of-sale (POS) machines, Areeba is the leading local online payment processor with over 50% of the credit card billing market. Earlier this year, they launched a feature for e-wallet users which enables bill settlement via their POS machines using QR codes. Plus, local employers are using providers such as Whish and Click2Pay to seamlessly distribute payroll for their employees.

  • This year Middle East Payments Services (MEPS) a Jordanian PSP partnered with Paytabs, a Saudi payments business, launched its latest Tap to phone’ soft POS application, MEPS FAST for the Lavent, including Lebanon. This contactless payment service is 24/7 and tailored for small to medium sized businesses. 

  • The digital payment market is forecasted to be $4,9 million for 2023 with total transaction value expected to grow 12% annually. The market is led by e-commerce with a projected total value at $4,4 million, followed by mobile POS payments and online remittances.

The Electronic Transactions and Personal Data Law of 2018 regulates digital payments and money transfers, including cards and checks. The BDL is the principal regulator and approves licences for foreign exchange houses and other financial service providers, including lending institutions and electronic PSPs.

Looking forward, Lebanon is optimistic about the economic picture - the entrepreneurial spirit of locals coupled with the discovery of natural gas can help bolster the economy. An agreement with the International Monetary Fund (IMF) last April will also assist Lebanon’s return to its feet with $3 billion in loans across 4 years. So if you’re scaling into the region, reach out to us to unlock Lebanon. 

Along the Mediterranean Sea and nestled between Syria, Israel and Jordan is the heart of our focus this week: Lebanon. Known as the Pearl of the Middle East, it is the only Arab country that does not have any desert. For many, it’s the meeting point of East and West in terms of geography and culture. A unique multilingual population speaking a hybrid of Lebanese Arabic, French and English.

There is no denying the financial and political challenges that Lebanon has faced over the past few years. Since 1997, the Lebanese Lira (LBP) has been pegged at 1,500 to the US dollar (USD). This dramatically changed in 2019 with the onset of the financial crisis in the country. Sparked by high government debt, and “financial engineering” without sufficient reforms, Lebanon’s GDP and currency dipped by 40% and 98% respectively.  Much like the rest of the world, the economy was further pressured downwards in 2020 by lockdown as much economic activity halted to curb the spread of Covid.

Despite this, Lebanon’s remittance market remains one of the highest in MENA, behind Morocco and Egypt. The fourth quarter of 2022 saw a market value of $1160 million for inbound remittances. The year ended with the remittance market attributing 37.8% of the Lebanese GDP. A recent study by Mercy Corps showed that remittances support 32% of Lebanese households to meet their basic monthly needs - such as food, rent and electricity -  as the cost of living continues to rise. A strong tell that the generosity of the Lebanese diaspora is an important contributor to the country’s efforts to rebuild the socio-economic landscape.

However the cost to remit funds (10.8%) is high relative to the global average (6%). In 2021, 70% of remittances were collected in cash while only 30% in bank transfer. Mastercard partnered with Credit Libanais to enable affordable inbound remittances to flow through direct bank transfers, helping to modernise the market through fast and secure transactions as well as leverage their global network for processing USD in December last year. Fintech app Purpl went live in Lebanon earlier this year, in partnership with local bank, Banque Libano-Française (BLF). Purpl secured its central bank licences to operate their cash out solution, which allows the diaspora to send funds into Lebanon. Beneficiaries can withdraw USD at ATMs, without a card or bank account requirement, and with zero fees.

Lebanon is a popular tourist destination - from beach clubs, Beirut nightlife to winter sports at the Mzaar Kfardebian (the Middle East’s largest ski area). In 2020, it was voted the Top Emerging destination by Travel Lemming, described as “the sort of place where the past, present, and future seemingly converge at once. It's a place influenced by countless cultures over millennia”. It’s no surprise that the 2023 tourism number has risen by 25.91% year-on-year, to just over 2.2 million tourists and generating about $9 billion in revenue for the country. Of this number, 75% are made up of the Lebanese diaspora returning home and the other 25% are foreigners (predominantly from other MENA countries). This definite tourism boom contrasts with the difficult economic picture of recent years, showing the determination and opportunity for Lebanon to regain its stride.

A quick look at the Lebanese demographic data shows that the median age is 28.8 years for the population of just over 5.3 million for 2023. The bulk of the population is urbanised at 96.6% in the three largest cities - Beirut, Ra's Bayrut and Tripoli. Millennials (the largest generational group in Lebanon) show a strong lean towards viewing themselves as global citizens, engaged with world news and latest tech. Their increased consumption of tech means they are using lifestyle digital services to boost convenience and connectivity. For example, a 2019 Ipsos report confirmed 62% of Millennials enjoy food delivery apps, 34% use ride hailing apps and 70% shop online. 

Pivoting to payments, we see a common Middle Eastern picture emerge for Lebanon, with cash being a dominant player. 

  • Cash is estimated at $9.8 billion in 2022 at 45.7% of the GDP according to the latest World Bank report. Given the currency challenges, the market has adapted to a dollarized cash economy, with Byblos Bank Chief Economist noting “dollars accounting for approximately 70-80% of operations”. 

  • With the move to a digital economy led by the young population, the demand for modern payment methods is clear. The card payments market is developing with the support of local banks which are keenly focused on tech infrastructure to enable these transactions. Visa is the major local card network company followed by Mastercard and American Express.

  • E-wallets were legalised in 2020 in line with Banque Du Liban’s (BDL) intention to help move the economy away from the heavy cash reliant model. Providing over 14000 payment point-of-sale (POS) machines, Areeba is the leading local online payment processor with over 50% of the credit card billing market. Earlier this year, they launched a feature for e-wallet users which enables bill settlement via their POS machines using QR codes. Plus, local employers are using providers such as Whish and Click2Pay to seamlessly distribute payroll for their employees.

  • This year Middle East Payments Services (MEPS) a Jordanian PSP partnered with Paytabs, a Saudi payments business, launched its latest Tap to phone’ soft POS application, MEPS FAST for the Lavent, including Lebanon. This contactless payment service is 24/7 and tailored for small to medium sized businesses. 

  • The digital payment market is forecasted to be $4,9 million for 2023 with total transaction value expected to grow 12% annually. The market is led by e-commerce with a projected total value at $4,4 million, followed by mobile POS payments and online remittances.

The Electronic Transactions and Personal Data Law of 2018 regulates digital payments and money transfers, including cards and checks. The BDL is the principal regulator and approves licences for foreign exchange houses and other financial service providers, including lending institutions and electronic PSPs.

Looking forward, Lebanon is optimistic about the economic picture - the entrepreneurial spirit of locals coupled with the discovery of natural gas can help bolster the economy. An agreement with the International Monetary Fund (IMF) last April will also assist Lebanon’s return to its feet with $3 billion in loans across 4 years. So if you’re scaling into the region, reach out to us to unlock Lebanon. 

Along the Mediterranean Sea and nestled between Syria, Israel and Jordan is the heart of our focus this week: Lebanon. Known as the Pearl of the Middle East, it is the only Arab country that does not have any desert. For many, it’s the meeting point of East and West in terms of geography and culture. A unique multilingual population speaking a hybrid of Lebanese Arabic, French and English.

There is no denying the financial and political challenges that Lebanon has faced over the past few years. Since 1997, the Lebanese Lira (LBP) has been pegged at 1,500 to the US dollar (USD). This dramatically changed in 2019 with the onset of the financial crisis in the country. Sparked by high government debt, and “financial engineering” without sufficient reforms, Lebanon’s GDP and currency dipped by 40% and 98% respectively.  Much like the rest of the world, the economy was further pressured downwards in 2020 by lockdown as much economic activity halted to curb the spread of Covid.

Despite this, Lebanon’s remittance market remains one of the highest in MENA, behind Morocco and Egypt. The fourth quarter of 2022 saw a market value of $1160 million for inbound remittances. The year ended with the remittance market attributing 37.8% of the Lebanese GDP. A recent study by Mercy Corps showed that remittances support 32% of Lebanese households to meet their basic monthly needs - such as food, rent and electricity -  as the cost of living continues to rise. A strong tell that the generosity of the Lebanese diaspora is an important contributor to the country’s efforts to rebuild the socio-economic landscape.

However the cost to remit funds (10.8%) is high relative to the global average (6%). In 2021, 70% of remittances were collected in cash while only 30% in bank transfer. Mastercard partnered with Credit Libanais to enable affordable inbound remittances to flow through direct bank transfers, helping to modernise the market through fast and secure transactions as well as leverage their global network for processing USD in December last year. Fintech app Purpl went live in Lebanon earlier this year, in partnership with local bank, Banque Libano-Française (BLF). Purpl secured its central bank licences to operate their cash out solution, which allows the diaspora to send funds into Lebanon. Beneficiaries can withdraw USD at ATMs, without a card or bank account requirement, and with zero fees.

Lebanon is a popular tourist destination - from beach clubs, Beirut nightlife to winter sports at the Mzaar Kfardebian (the Middle East’s largest ski area). In 2020, it was voted the Top Emerging destination by Travel Lemming, described as “the sort of place where the past, present, and future seemingly converge at once. It's a place influenced by countless cultures over millennia”. It’s no surprise that the 2023 tourism number has risen by 25.91% year-on-year, to just over 2.2 million tourists and generating about $9 billion in revenue for the country. Of this number, 75% are made up of the Lebanese diaspora returning home and the other 25% are foreigners (predominantly from other MENA countries). This definite tourism boom contrasts with the difficult economic picture of recent years, showing the determination and opportunity for Lebanon to regain its stride.

A quick look at the Lebanese demographic data shows that the median age is 28.8 years for the population of just over 5.3 million for 2023. The bulk of the population is urbanised at 96.6% in the three largest cities - Beirut, Ra's Bayrut and Tripoli. Millennials (the largest generational group in Lebanon) show a strong lean towards viewing themselves as global citizens, engaged with world news and latest tech. Their increased consumption of tech means they are using lifestyle digital services to boost convenience and connectivity. For example, a 2019 Ipsos report confirmed 62% of Millennials enjoy food delivery apps, 34% use ride hailing apps and 70% shop online. 

Pivoting to payments, we see a common Middle Eastern picture emerge for Lebanon, with cash being a dominant player. 

  • Cash is estimated at $9.8 billion in 2022 at 45.7% of the GDP according to the latest World Bank report. Given the currency challenges, the market has adapted to a dollarized cash economy, with Byblos Bank Chief Economist noting “dollars accounting for approximately 70-80% of operations”. 

  • With the move to a digital economy led by the young population, the demand for modern payment methods is clear. The card payments market is developing with the support of local banks which are keenly focused on tech infrastructure to enable these transactions. Visa is the major local card network company followed by Mastercard and American Express.

  • E-wallets were legalised in 2020 in line with Banque Du Liban’s (BDL) intention to help move the economy away from the heavy cash reliant model. Providing over 14000 payment point-of-sale (POS) machines, Areeba is the leading local online payment processor with over 50% of the credit card billing market. Earlier this year, they launched a feature for e-wallet users which enables bill settlement via their POS machines using QR codes. Plus, local employers are using providers such as Whish and Click2Pay to seamlessly distribute payroll for their employees.

  • This year Middle East Payments Services (MEPS) a Jordanian PSP partnered with Paytabs, a Saudi payments business, launched its latest Tap to phone’ soft POS application, MEPS FAST for the Lavent, including Lebanon. This contactless payment service is 24/7 and tailored for small to medium sized businesses. 

  • The digital payment market is forecasted to be $4,9 million for 2023 with total transaction value expected to grow 12% annually. The market is led by e-commerce with a projected total value at $4,4 million, followed by mobile POS payments and online remittances.

The Electronic Transactions and Personal Data Law of 2018 regulates digital payments and money transfers, including cards and checks. The BDL is the principal regulator and approves licences for foreign exchange houses and other financial service providers, including lending institutions and electronic PSPs.

Looking forward, Lebanon is optimistic about the economic picture - the entrepreneurial spirit of locals coupled with the discovery of natural gas can help bolster the economy. An agreement with the International Monetary Fund (IMF) last April will also assist Lebanon’s return to its feet with $3 billion in loans across 4 years. So if you’re scaling into the region, reach out to us to unlock Lebanon. 

George Davis, Fuse Co-Founder & CEO
George Davis, Fuse Co-Founder & CEO

George Davis

, Co-Founder & CEO

at Fuse

George Davis

, Co-Founder & CEO

Co-Founder & CEO

at Fuse

Fuse

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