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Over half of UAE population using digital wallets: Survey

A new survey by leading Mena payments solutions provider, Checkout.com, reveals that security remains the most important factor for UAE residents when shopping online — with nearly 40 per cent of respondents trusting digital wallets as much as banks.

Published: Sun 5 Jun 2022, 12:08 AM

Updated: Tue 7 Jun 2022, 3:55 PM

By
Sandhya D'Mello

AFP file photo

Do you have a digital wallet? should you have one? contactless payments, online shopping, surge in ecommerce are some of the factors that have shaped evolving of digitial wallet which gives multiple options to buy goods and services easing life-style and enhancing consumer experience.

Digital wallet is a financial transaction application that runs on mobile devices. It securely stores your payment information and passwords. These applications allow you to pay when you’re shopping using your device so that you don’t need to carry your cards around. You enter and store your credit card, debit card, or bank account information and can then use your device to pay for purchases, according to Investopedia.

A new survey by leading Mena payments solutions provider, Checkout.com, has found over half of the UAE population are using digital wallets for the first time. The survey reveals that security remains the most important factor for UAE residents when shopping online – with nearly 40 per cent of respondents trusting digital wallets as much as banks. Indeed, the future bodes well for digital wallets, with 48 per cent of respondents believing that digital wallets could lead to a cashless society in a decade.

Mo Ali Yusuf, regional manager for MENAP at Checkout.com, said, “With more and more people embracing the convenience of digital wallets coupled with the reassurance of their transactions being safe and secure, digitisation of the payment system is unstoppable. The findings reveal an undeniable trend towards digital wallets becoming the future of consumer payments.”

Mo Ali Yusuf, regional manager for MENAP at Checkout.com.

The survey sought to discover the growth in digital wallet usage among UAE residents as online payments surge. The Checkout.com MENAP Payments Report of 2021 revealed that approximately 83 per cent of UAE residents would maintain or even increase their current level of eCommerce spending into 2022.

The pulse survey of over 1,000 UAE consumers found cash usage continues to decline, with only 20 per cent of respondents saying they use COD (cash-on-delivery) for online purchases. This compares to 40 per cent in 2020, according to Checkout.com’s 2021 MENAP report.

The growth of digital wallet usage by UAE residents has been spurred by the ease of paying bills, with 58 per cent of respondents ranking this as the number one item they use their digital wallet for to make payments, with groceries a close second (55 per cent). The report also reveals that 28 per cent of UAE residents use wallets to send funds to friends and family, showing the popularity of peer-to-peer transactions over traditional bank-to-bank transfers. Digital wallets also stand to shake up the multibillion-dollar remittance market in the Gulf, with a third of UAE residents stating they are using digital wallets to send funds overseas. The pandemic has put a spotlight on payments and on digital payments in particular. Indeed, payments are now widely recognised as a key part of the consumer shopping journey and increasingly business leadership understands that payments have a role to play from ‘Pre Purchase to post-purchase’ (especially in the ecommerce channels).

“With the pandemic and its aftershocks taking effect, cash will continue to be displaced - driven by increased e-commerce levels in some categories where ‘Cash was King’ historically such as groceries, and greater use of non-cash form factors of payments within the brick and mortar (in-store) environment. This increased use of non-cash payments in-store, will bode well for contactless spends, both ‘Tap n Go’ using ones cards (Credit, Debit, etc) and using mobile wallets. Affordability will continue to remain key for consumers, especially with rising cost of living, meaning that the need for ‘credit’ and ‘managing cash flow’ will remain top of mind. One should anticipate that credit card spends will make a comeback (they were displaced by debit card spends during the height of the pandemic) and consumer adoption of BNPL will grow – both online and instore (although I fear, some of the existing sub-scale players might be squeezed out of the market as funding starts to dry up for businesses who are not making money and don’t have a clear path to profitability)," said Arjun Singh, payments industry expert.

"Contactless will continue as a mega trend on a number of fronts – firstly, wallet adoptions will continue to grow, driven by both choice (a number of wallets will be in the mix) and increased awareness levels among consumers (the consumer over time will become more comfortable using wallets), secondly, as retailers make the shopping experience more experiential, they will include contactless payments as a part of the customer journey - to reduce the friction associated with payments and finally, we will see the adoption of biometrics as yet another ‘form factor’ of payments among consumers."

Arjun Singh.

Singh further added: “From a retailers perspective, unified and experiential commerce will become a reality for the future, which will have some interesting implications for their payments strategies. My advice to all retailers — traditional or digital, is to make payments a key part of their customer and go-to-market strategy. A number of platforms based players (retailers, delivery companies, etc) will embed financial services as a part of their offering — launching their own wallets and potentially even launching white-labelled/ Co-branded BNPL in the near term will be two areas where we will see increased activity. Finally, we will see some interesting disruption and innovation in the B2B payments segment — the next wave of innovation in the region — it’s much needed and the disruption has already started. Wallets will play a role in this space too.”

The Checkout.com report revealed little difference in online shopping habits between men and women, demonstrating digitisation has appeal across genders. However, there is a broader appeal for digital wallets amongst younger shoppers. The findings highlight that 16 per cent of 18-24 year-olds prefer digital wallets compared to 9 per cent amongst the 25-34 age group.

Dubai-based Richa Patil, founder and chief executive officer of MetaDecrypt -Blockchain Tech and Consulting firm, which is into developing, adoption and amplification of digital wallets, said: “The UAE will see huge demand for development of digital wallets as the cryptocurrency gets accepted as main stream payment option. The digital assets will pave more demand from retail sector as consumers buy with varied payment options and hence this will see more innovative payments solutions.”

— sandhya@khaleejtimes.com