MEA Fintech Onboarding: Why It's Hard and How to Speed It Up

Fintech in the Middle East and Africa (MEA) is experiencing unprecedented growth, 
with the market projected to surge from USD 18.07 billion in 2024 to USD 103.65 billion by 2033. 
 
This rapid expansion is being shaped by accelerating digital transformation, evolving regulatory frameworks, and shifting consumer expectations. However, alongside these opportunities come significant onboarding challenges. Inefficient processes are causing substantial customer abandonment, highlighting the urgent need for streamlined, scalable solutions. 

Our article explores:  

• Why onboarding merchants is difficult for fintechs in the MEA  
• Key challenges Fintechs face when onboarding merchants across the MEA
• How fintech companies can speed up their onboarding processes safely 
• How Cedar Rose enables faster, compliant onboarding at scale  
  
  

Why Onboarding Merchants is Difficult for Fintechs in the MEA  

Onboarding merchants in the Middle East and Africa is challenging for fintech companies due to a combination of regulatory, operational, security, and cultural factors. The fragmented regulatory environment across countries forces fintechs to comply with a patchwork of laws, while stringent licensing requirements delay market entry and increase overhead. Processes like Know Your Business (KYB) and varying data privacy laws further complicate compliance, especially in markets where official records are limited or unreliable.  

On the operational front, a shortage of skilled talent and restricted access to capital hinder the development of efficient, scalable onboarding systems. Moreover, infrastructure gaps, including inconsistent internet access and underdeveloped payment networks, particularly in Africa make it difficult to deliver seamless digital onboarding experiences. Trust barriers also persist, with many merchants, particularly in traditional sectors, wary of adopting fintech solutions due to cultural resistance and scepticism toward new financial technologies. 

Adding to these challenges are growing third-party risks and escalating fraud risks, two areas tackled below: 

• Third-Party Risks 
  

Fintechs in the MEA encounter significant third-party risks during merchant onboarding, including vulnerabilities in identity verification, data security breaches, payment processing failures, and regulatory compliance issues. 

Reliance on external vendors for KYC/KYB, data management, and transaction support creates critical failure points within the region’s legal and regulatory environments. Thorough vendor due diligence is complicated by country-specific standards, like Saudi Arabia's SAMA Cybersecurity Framework and the UAE's Outsourcing Regulation. 

Data localisation laws, mandating onshore storage in Saudi Arabia and controlling cross-border data transfers in the UAE, further escalate complexity. Vendor instability, as demonstrated by the Synapse collapse, underscores the systemic risks of outsourcing. Fintechs must also address growing fourth-party risks, ensuring oversight of vendor subcontractors. 

Furthermore, cybersecurity vulnerabilities associated with cloud services, payment processors, and ID verification platforms expose fintechs to fraud, data leaks, and regulatory penalties. Operational hurdles, like integration complexities and resource limitations, especially for smaller firms strain onboarding. Firms must also manage high compliance costs and potential financial and reputational losses. 

•  Fraud Risk Threats  

Key threats include identity fraud, where criminals use stolen information to pose as legitimate businesses, and synthetic identity fraud, which combines real and fake data to create fictitious entities that bypass verification. These methods often result in unauthorised payments, chargebacks, and reputational damage. 

Other schemes include account takeovers (ATO) through phishing, SMS scams, or SIM swaps; transaction laundering, where approved merchants process payments for undisclosed illicit businesses; and bust-out fraud, in which merchants build trust before rapidly executing fraudulent transactions. Fraudsters also use shell companies to disguise illegal financial activity. 

Further risks include insider threats, business email compromise (BEC), where attackers manipulate onboarding communications via email, and loyalty program abuse for illicit financial gain. Moreover, the Buy Now, Pay Later (BNPL) model introduces additional vulnerabilities, such as fake account creation and collusion between fraudulent merchants and users. 

The rise of Fraud-as-a-Service (FaaS) has also made these attacks more accessible and scalable, offering tools like forged documents, synthetic profiles, and onboarding bots. Combined with AI-driven tactics such as deepfakes (realistic fake audio, video, or images), and targeted phishing, these methods are increasingly difficult to detect across fast-moving digital channels. 

Key Challenges Fintechs Face When Onboarding Merchants Across the MEA  

 
How Fintechs Can Speed up Their Onboarding Processes Safely 

For secure and speedy merchant onboarding, MEA fintechs should:  
 
1. Adopt a Layered Risk-Based Security Model  

Use tiered controls: strong KYB/KYC, biometrics, document authentication, device intelligence gathering, and behavioural analysis during application, backed by continuous merchant risk-based monitoring.  

2. Invest in Regional Compliance Expertise  

Invest in local compliance expertise and RegTech suited to MEA markets. Prioritise tools with KYB/UBO registry access and Arabic language support for Arab countries. Ensure alignment with regional regulations and stay agile as laws evolve. 

3. Improve Data Integration and Compliance  

Break down data silos to gain a full view of merchant risk. Use APIs and unified platforms to connect onboarding, compliance, and transaction data. Apply quality controls and enrich profiles with third-party data to strengthen KYB, especially in data-scarce MEA markets. 

4. Establish a Robust Third- Party Risk Management Framework  

Formalise vendor management with thorough due diligence and risk-based classification. Use contracts covering security, privacy, service levels, and liability. Align with local rules and manage concentration risk for critical providers. 

5. Use Automation and AI Strategically 

Use automation for routine onboarding tasks to boost efficiency and speed. Apply AI and ML for advanced fraud detection and risk analysis but maintain human oversight and model validation to ensure accuracy and regulatory compliance. 

6. Balance Security and User Experience 

Tailor onboarding friction to risk level: apply stricter checks to high-risk merchants while streamlining the journey for others using passive verification and clear communication. 

7. Promote Collaboration and Staff Training 

Build a culture of compliance by training staff on fraud patterns, transaction risk, and social engineering. Encourage collaboration between compliance, tech, operation and risk teams. 

How Cedar Rose Enables Faster, Compliant Onboarding at Scale 

Cedar Rose enables faster, compliant onboarding for fintechs across the MEA region. 
 
Our centralised platform CRiS Intelligence provides real-time access to reliable data on millions of companies, making it easier to verify merchant identities, assess risk, and meet compliance requirements, even in markets with limited public records. 
CRiS Intelligence streamlines KYC and KYB processes, eliminates data silos, and offers customisable onboarding workflows tailored to your risk profile. 
 
From due diligence and fraud prevention to ongoing monitoring and task management, our platform equips fintechs with the automation and insights needed to scale merchant onboarding and grow confidently in a fast-evolving market. 

Contact us today to discover how we can support your onboarding journey.  

Sources 

1. https://www.marketdataforecast.com/market-reports/mea-fintech-market (Market data)
2. https://dashdevs.com/blog/mena-regulations-2023/ (Regulations)
3. https://www.bdo.ae/en-gb/insights/unmasking-fraud-risks-in-the-fintech-industry (Fraud)
4. https://sumsub.com/newsroom/new-middle-east-fraud-trends/ (Fraud trends)
5. https://userguiding.com/blog/fintech-client-onboarding (Onboarding)

Table Sources 

1. https://www.afi-global.org/wp-content/uploads/2024/10/The-Supervision-of-Fintech-in-the-African-Region.pdf (Fintech supervision)
2. https://fynxt-com3.azurewebsites.net/digital-onboarding-adoption-in-mea/ (Onboarding adoption)
3. https://mindster.com/mindster-blogs/regulatory-impact-on-fintech-in-the-gcc-region/ (Regulatory impact)
4. https://www.investafrica.com/insights-and-news/how-to-accelerate-customer-onboarding-in-the-middle-east-amp-africa (Customer onboarding)
5. https://thefintechtimes.com/introducing-the-fintech-times-middle-east-and-africa-2024-report/ (Fintech report MEA)