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Fintech firms set to reap dividends as UAE’s digital payments market booms

This year, the UAE’s digital payments market is projected to reach $28.74 billion

The digital payments market in the UAE is on target to grow at a compound annual growth rate of 8.02 per cent to $39.13 billion by 2027, driven by the increasing adoption of e-commerce, mobile payments, and contactless payments, according to industry experts.

This year, the UAE’s digital payments market is projected to reach $28.74 billion, while globally, the total transaction value in the sector is projected to hit $9.46 trillion, data provided by Statista shows. Total global digital transaction value is expected to show a CAGR of 11.80 per cent resulting in a projected total amount of $14.78 trillion by 2027.

A recent study released by Amazon Payment Services said that digital payments across key sectors in the UAE are expected to increase at a CAGR of 18.3 per cent from 2021 to 2023. Internet penetration in the UAE is among the highest in the Mena region, with the percentage of the population using the Internet estimated at 329 per cent.

Over the past two years, the UAE’s digital payments penetration has been growing at over 20 per cent CAGR, paving the road for fintech firms and payment aggregators to reap dividends, according to the payment infrastructure company, Infbeam Avenues.

The regional fintech growth prospects are also on the upswing with an anticipated three-fold growth by 2025. Infbeam Avenues, which recently consolidated its global operations under its UAE arm, Vavian International, is targeting a payment processing size of Dh100 billion in the region, from the current Dh10 billion by 2030, growing at a CAGR of 40 per cent, Vishwas Patel, executive director, Infibeam Avenues, said.

Infibeam’s flagship payment gateway brand, CCAvenue, is the second-largest non-bank payment aggregator in the UAE. “Our consolidation of international business out of UAE is a crucial step in the company’s pursuit to expand in the growing regional market, leading to increased global play in the digital payments space with our flagship brand CCAvenue,” he said.

Infibeam’s global hub in the UAE also comes in the context of the country emerging as a fintech hub with over 800 start-ups worth $15.5 billion, and leading the way in digital banking, said Patel. Quoting GlobalData, he said that the UAE cards and payments market size was valued at $119.8 billion in 2022 and is expected to achieve a CAGR of more than 8.0 per cent during 2022-2026.

As part of Mena expansion, Infibeam recently tied up with PayPal allowing businesses in the region to settle and receive payments from their cross-border customers and vendors.

Industry experts said the digital payments market is projected to nearly double in size across the UAE, Saudi Arabia, and Egypt in 2023. With 5G internet coverage made available across the UAE, all public areas, including shopping malls and government organisations, offer free high-speed internet connections, enabling consumers to make online payments without difficulty.

The UAE leads digital banking in the region and is developing into a major global fintech hub with supportive government policy. Rising partnerships between banks and fintech companies are likely to drive innovative products and facilitate easier adoption of new fintech solutions, including in digital payments, they said.