Egypt Proves Tricky Yet Promising For dLocal Amid LatAm Fintech Invasion

Egypt’s digital commerce landscape is evolving rapidly—and Uruguay-born dLocal, which first set sights on the market in 2018, is riding the crest of this wave. Despite deep-seated cultural reliance on cash, marked by 57% of transactions still conducted in physical currency, dLocal is capitalising on Egypt’s burgeoning e-commerce market, where 38% of the population shops online every week, the average consumer is just 24, internet penetration stands at 72%, and mobile ownership soars to 94%, per recent stats.

Sherif Radi, dLocal’s Egypt Country Manager, shed light on the dual nature of the market in an in-depth interview with WT. “There’s a long-standing cultural preference for cash, stemming from trust in its reliability and tangibility,” he explained. Yet, Radi noted that national initiatives—such as the introduction of Meeza, mobile wallet regulation, and the expansion of instant payment networks—are gradually nudging consumers toward digital alternatives. “Enhancing digital infrastructure and incentivising digital transactions remain crucial,” he added, underscoring the need to overcome challenges like limited banking access and digital literacy, particularly in rural areas.

dLocal, which went public in 2021, helps global businesses accept payments from customers in various markets by offering local payment methods like mobile wallets, bank transfers, and cash. Its strategy in Egypt hinges on its ability to adapt to local nuances. The company operates as a comprehensive payment processing platform that integrates popular local channels like Fawry, mobile wallets, and bank transfers. This enables international merchants to collect payments in Egyptian pounds and sidestep the volatility of currency conversion.

“By processing payments in local currency, dLocal helps ensure that businesses can maintain stable pricing and avoid the unpredictability associated with currency conversion,” Radi emphasised.

Cash rules, but Digital booms

Recent performance figures highlight Egypt’s newfound role as a leading market for dLocal’s African operations. In the third quarter of 2024, Egypt generated USD 18.6 M in revenue—a 318% year-over-year increase that now accounts for 10% of dLocal’s global revenue. For the first nine months of 2024, Egypt contributed USD 72.6 M, up significantly from USD 18.3 M in the same period last year. This stellar growth contrasts sharply with Nigeria’s performance, where a steep 80% revenue drop, largely driven by a devalued naira, has relegated Nigeria from being a growth engine to a cautionary tale of economic volatility.

The Egyptian market, while lucrative, is not without its complexities. Radi pointed out that Egypt’s regional diversity—spanning bustling urban centres like Cairo, Giza, and Alexandria as well as more remote rural areas—demands tailored approaches. “Understanding local consumer behaviour is essential,” he told WT. “Building strong community connections and leveraging local insights can significantly boost brand loyalty.” A robust on-the-ground presence and partnerships with local players are key in helping global merchants navigate regulatory landscapes and consumer preferences, ensuring that digital payment solutions are not only adopted but trusted.

Meanwhile, the competitive scene is heating up as Latin American fintechs increasingly eye Africa. Recent trends reveal that companies like Brazil-based EBANX, Colombian fintech Minka, and PayRetailers are making significant inroads, undeterred by the existence of formidable African rivals such as Nigerian unicorn Flutterwave, as well as Stripe-owned Paystack.

These LatAm firms, drawing on their experience in markets with similar cash reliance and fragmented payment systems, view Africa as a vast, underpenetrated digital gold rush. They are betting on unified APIs and localised solutions to overcome the continent’s complex payment infrastructures—a challenge dLocal has already met head-on.

dLocal’s unified platform—capable of handling both pay-ins and payouts across more than 40 countries via a single API—affords it a competitive edge, Radi asserts. “Our approach not only enhances the user experience for consumers but also enables merchants to transition effortlessly from cash-based transactions to secure digital payments,” he noted. This scalable technology, combined with strategic local partnerships, positions dLocal as one to watch in Africa’s digital payments space.

While the landscape remains challenging—with cultural preferences, regulatory bottlenecks, and infrastructural gaps testing the resolve of fintech operators—the explosive growth in Egypt’s e-commerce and digital payments signals a promising narrative. Egypt is proving to be a tricky but fertile market, one that offers a compelling blueprint for success amid an emerging wave of Latin American fintechs storming the African continent.