Are UAE consumers becoming more financially aware and turning to installment payments?

By Puja Sharma

Majority (75%) of UAE survey respondents are financially aware and have a good estimate of their credit score

• Nearly half (48%) of survey respondents have been saving by building up a balance of money in their bank account over the past 12 months
• More than half of survey respondents (52%) believe that installments would help manage finances

Visa (NYSE:V), a world leader in digital payments, has launched the results of a 2024 Financial Literacy Survey which assesses financial knowledge and choices of consumers in the UAE in managing credit, savings and spending.

The Visa survey gathers insights from men and women aged between 18-55 years in the emirates of Dubai, Abu Dhabi, and Sharjah. According to the survey, more than half of respondents from all age groups are confident about their financial situation. A comparable proportion of respondents are observed to be financially conscious of their spending, keep a close personal watch on their finances (68%), and set long-term financial goals and strive to achieve them (67%).

Dr. Saeeda Jaffar, Visa’s SVP and Group Country Manager for GCC, said: “As the UAE sets its sights on doubling the digital economy’s contribution of GDP, at Visa, we believe responsible money usage is the foundation of a sustainable economy.  Our 2024 Financial Literacy Survey shows 64% of UAE respondents feel their financial situation hinders their ability to accomplish significant goals. So, while we’re bringing solutions like Installments to the UAE, we are delighted to bring our research to the conversation around financial literacy and remain committed to supporting the UAE government’s financial education efforts.”

Financial Knowledge

The Financial Literacy Survey assessed respondents on their knowledge of concepts including credit scores, loans, interest rates, and how these impact their incomes:

• Around 75% are aware of their credit score and what it means to their financial situation. However, only 33% fully understood interest rates.
• At least 50% of respondents claim to be knowledgeable about financial matters. More than half of respondents (all age groups) are confident about their future financial situation.
•  Thirty-three percent (33%) do not want to take a loan in the immediate future, claiming some control over financial expenditures and savings.
•  Sixty-five percent (65%) state they want to improve their knowledge of savings and investments, followed by 44% who want to know more about Budgeting and Financial planning, and 38% who want an education on Credit and Debt Management (38%).

Financial Situation

The survey also gauged the spending, savings, and investment habits of UAE consumers:

• Nearly half (48%) stated they were building up their bank account balance over the past 12 months.
• Around 20% bought financial investment products other than pension funds.
•  Forty percent (40%) spent little or much less than their income over the last 12 months, while 37% of respondents spent as much as their incomes.

Responsible Usage of Installments

As consumer interest in installment payment options continue to grow, Visa recently partnered with ADIB and Mashreq to enable Visa Instalment Solution (VIS) for UAE consumers.  With VIS, Visa credit cardholders can opt for “Visa Installments” to pay back the utilized amount from their credit cards for their spending, into smaller, equal payments to effectively manage their budgets and afford larger purchases effortlessly.

Unlike some BNPL options which may be made available to individuals who may not meet the qualifications for traditional credit – depending on the provider’s terms and conditions as well as risk appetite – VIS is designed specifically for creditworthy consumers, in line with Visa’s commitment to responsible innovation.

Visa’s survey explored sentiments on the use of responsible installments in payments:

Key Takeaways:

• Among respondents, 67% carefully consider affordability before buying something. Around 16% survey respondents have a BNPL plan active currently or have converted a purchase on their credit card to an installment (6%).
• Around 64% believe their financial situation limits their ability to do things that are important, and expressed interest in flexible credit solutions that would enable responsible usage of installments.
• Interestingly, 52% believe that installments would help manage finances better.
• Respondents primarily prefer to pay for future electronic gadgets with a credit card (31%), with 9% looking for BNPL plans and 4% preferring credit card installment plans.
• While 43% of consumers prefer to choose installment payment from merchants for high-value purchases including electronics or mobile phones, many believe installment plans would be beneficial for emergency expenses including medical bills and urgent car repair (28%), life events such as weddings or purchase of a home (29%), education (32%), or holiday planning (24%).