UAE witnesses instant payments ‘revolution’ with digital payments boom

By Puja Sharma

The use of digital payment is increasing at an exponential pace in the UAE as around 20% of people have reported a decline in cash usage, according to a report by Amazon Payment Services.

Amazon Payment Services, a digital payments platform operating across the Middle East and North Africa (MENA) region, announced the launch of re: Imagine Payments, a thought leadership forum which aims to help merchants and anyone interested in the digital payments space to increase their knowledge.

According to a paper released by Amazon Payment Services, there was an instant payment “revolution” in the UAE as digital payments across key sectors in the UAE are expected to increase at a compound annual growth rate (CAGR) of 18.3% from 2021 to 2023. It said nearly half of Gen Z in the UAE use digital or mobile wallets for daily payments, compared to 48% in Saudi Arabia, and 43% in Egypt.

Peter George, managing director for Amazon Payment Services in the Middle East and North Africa (Mena), said, Gen Z folks “certainly have the greatest propensity to demand most innovation and they are perhaps the most in-demand of seamless experiences as well. Gen Z is the youngest, but they’re also the most demanding, but that keeps us on our toes as well.”

The research found nine key payment themes occurring in the present which could influence the future of payments in the region: Omni-channel payments; peer-to-peer payments; in-app payments; buy now, pay later options; installments; merchant lending; super apps; cross-border shopping; and instant payments.

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%. 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 report added that 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.

Ronaldo Mouchawar, vice-president of Amazon MENA said, the digital payments market is anticipated to nearly double in size across UAE, Saudi, and Egypt by 2023 and expects local businesses to flourish more than ever in that space.

The growth in the digital payment sector is driven by a very high internet penetration rate, a significant fintech boom, a stable economy, and the large number of young population in the UAE and region.

Key Highlights

• In analyzing the progress of digital payments across key sectors in the UAE, KSA, and Egypt, research shows that from 2021-2023 the overall digital payments market in the UAE is expected to increase at a compound annual growth rate (CAGR) of 18.3%; 13.6% in the KSA; and 19.6% in Egypt.
• Looking closely at each of the key countries, findings showed that there was an instant payment “revolution” in the UAE; expansion in digital banking in the KSA; and a boost in online retail in Egypt due to increasing smartphone penetration rates.
• In KSA, 89% of consumers reported using at least one new payment method in the past year, including options to Buy Now, Pay Later, and person-to-person transfers.
• In Egypt, digital payments were found to promote financial inclusion with penetration of prepaid cards and mobile wallets approaching 40% of the adult population.
• Around 51% of Generation Z in the UAE use digital or mobile wallets for daily payments, compared to 48% in KSA, and 43% in Egypt.
• Three key pillars emerged through the research to define digital payment trends—namely, collaborative governance; the rise of the borderless marketplace; and increasing financial inclusion.