It's time for digital payments in the UAE

Mobile payments in the UAE are experiencing significant growth.

Cash still reigns supreme when it comes to making payments in the UAE; however, experts have pointed out that with the growth of e-commerce in the region, newer payment methods such as Samsung Pay and Apple Pay are steadily gaining ground.

Speaking to Khaleej Times on the sidelines of the recently concluded Seamless Middle East 2018 exhibition, David Noel-Lardin, vice president of Digital Payments for the CISMEA region at Gemalto, said that mobile payments in the UAE are experiencing significant growth.

"Since the dawn of the smartphone just over 10 years ago, consumers' approach to banking and payments has changed radically. The launch of new innovations like Samsung Pay, Emirates NBD Pay, and Apple Pay, are giving millions of people the chance to pay for things directly from their smartphone. For many, the ability to access account information or make payments via an app has become so prevalent that physically visiting a bank branch is a novelty," he said.  

"In fact, according to a survey by Gemalto, 67 per cent of UAE consumers have said that it is easier to use online banking solutions than having to physically visit a branch," he added. "In addition, our study underpinned the notion that e-banking is on the rise in the region, and results showed that 74 per cent of UAE consumers use online and mobile banking."

Referring to a recent Juniper report on mobile and online remote payments, he further noted that the total transaction value for remote physical and digital goods purchases made using mobile handsets and tablets in the MEA region was estimated at more than $12 million in 2017; and that this number is set to grow to more than $16 million in 2018. Although cash is still king in the UAE, he noted that the government is working hard to change this, and aims to become cashless by 2020. Today, the number of cards in circulation in the UAE stands at 16 million, and is expected to grow to 18.5 million in 2020.

Similarly, Wael El Aawar, vice president of NCR Financial Services, revealed that 2016 saw a two per cent increase in cash withdrawals from the year before - indicating that cash may still be king when it comes to payment.

"But, Internet and mobile banking are changing consumer behaviors in markets across the region; and these consumers are increasingly looking for more sophisticated banking experiences - forcing banks to innovate in order to create a unique customer experiences. Cardless cash withdrawals are now quite common, and other added features, such as automated deposit functionality, mean that banks are increasingly able to provide services to customers for which a branch would have been previously required," he said.

"So, this is still predominantly a cash-based society, but all these omni-channel solutions bode well for the banking ecosystem, giving consumers more flexibility and efficiency, and driving growth across the sector," he explained. "The priority for banks now appears to be the expansion and optimization of their ATM fleets, with the installed base in the UAE expected to reach 6,500 by 2022. Functionality is expected to increase, with near field communication based cardless cash withdrawals expected to become more widespread, in addition to mobile phone, pre-stage transactions and biometric authentication."

Experts have also noted that the shift towards newer payment methods will accelerate as biometric identification technologies improve and are incorporated into devices. According to the survey commissioned by Visa and conducted by AYTM Market Research, 98 per cent of consumers would like to use at least one method of biometrics to make future payments, with 69 per cent interested in paying using fingerprint recognition and 56 per cent keen to pay using eye scanning technology. This has led analysts to estimate that the UAE Mobile Wallet Project is expected to see Dh50 billion in payments switched from cash to mobile within five years.

"Newer payment methods, such as Apple Pay and other wallets, are very gradually starting to make their presence felt," said Sirish Kumar, co-founder and CEO of Telr. "Cash is still the UAE's most popular payment method, followed by credit cards. Even in the case of e-commerce, we still see cash-on-delivery as a very popular payment method."

"It is worth noting though that even in the past few years, we've seen the proportion of cash-on-delivery payments steadily decline, from 75-80 per cent around four years ago to 40-45 per cent at the moment," he revealed. "A driver of this are the increasing prevalence of e-commerce payments that don't lend themselves well to cash - such as subscription models, government services, and on-demand services. Consumers' familiarity and comfort with these in turn drives a reduction in the use of cash in other areas of e-commerce."

- rohma@khaleejtimes.com

Rohma Sadaqat

rohma@khaleejtimes.com