The Old Vs. New trends of UAE’s payment layout
The Emirates had a slow welcome for digital transactions compared to Western countries. Due to the lack of trust in security, the UAE was a little hesitant in accepting e-wallets and similar online transactions.
However, in the last couple of years, banks and tech giants worked very well to remove the mistrust factor and created more buzz around the new generation payment opportunities. They were able to get millennials and Gen-Z to use digital payment options. The results are evident in front of us.
Compared to 2017, 2019 had rapid growth in the use of QR code payments, e-wallets, and NFC.
The Old Vs. New trends
While the Global payment landscape had a majority of Debit/Credit card POS payments followed by cash and then e-wallets, UAE had a different scenario. UAE relied more on cash transactions and outnumbered other options by a large margin.
People remained cautious about the security and value for money, especially for e-commerce transactions. But in the last two years, the payment landscape changed for the better. The data from various banks including Mashreq and Noor bank reveals that the number of card transactions had increased and they have been using it for smaller transactions as well.
The younger generation indulged more in online transactions and increased the trust factor overall. Though it seems the number is small, the use of e-wallets also had increased.
The UAE has started to prefer card transactions more. Still a cash-driven economy, the change will have huge replications for the good. The cards are being used for small transactions also. We expect more digital payment options on the rise in the upcoming year.
The entry of Giant companies
The local players were already in the scene since 2012. They had regularly updated the product. But the entry of foreign tech giants added to the trust factor and accountability. Many of them were used by the ex-pats back in their home country and were popular.
Samsung Pay entered the UAE market in April 2017 and followed by Apple Pay. Their prominent competitor Alibaba’s Alipay also made a huge entrance with a partnership of Mashreq Bank. Google also entered the scenario with their payment option Google Pay in November 2018.
What is next?
The UAE Central Bank’s digital payment strategy ensured that the payment options are interoperable and give the value for money for merchants and customers in a cost-effective way.
According to the report by ResearchAndMarkets.com, UAE will surpass mobile wallet transactions by US$2.3 billion by 2022. Gen-Z will be on a huge role in the next years. As a tech-savvy generation, they are expected to rely on NFC payments and e-wallets more and more. So we can expect in a few years, the margin between cash and other payment options will reduce by a large value.
The Govt. also strives to promote a digital economy and reduce cash transactions.
UAE will surpass mobile wallet transactions by US$2.3 billion by 2022
Having said that, the UAE won’t go for a completely digital economy as Sweden did. We are more interested in a balanced cash economy and a digital economy as it will have more stability. Especially when the UAE is a country heavily dependent on retail and small business also other than the traditional market.
For Banks and businesses
The fragmented layout of UAE’s payment trends is a bit issue for the banks. A lot of payment options are available including Cards, EBT, EMV, Magnetic stripe cards, NFC, QR codes and so on.
Currently, most of the banks use multiple devices for payment acceptance as the old age POS won’t accept NFC payments and QR codes. This is an issue for the merchants and banks as there is a large room for error.
Banks like Mashreq had already updated their POS to Smart POS POYNT with Checkout Point’s Terminal App so that they can accept all of these payments from cash to NFC with a single device. This eliminated the error to a large extent, also maintained the security factor.
SMEs also should be updated. Over 90% of non-cash transactions of UAE are POS transactions followed by Cheques and bank transfer.
Your POS must be competent enough to support your business, accept all payment methods from the customer, and improve the productivity of your sales.
With a customized app for your business type (Foodie for QSRs, Lazeez for Fine dining restaurants and Souk for retail) and Smart Terminal, the update from your old POS will cater to your specific business requirements and boost the sales.