Consumers and service providers in the UAE are increasingly opting for digital payments over cash use, according to experts.
Every year, consumers in the country pay $230 billion in payments at 170 government entities and more than 350,000 merchants. More than 75 per cent of the total payments are made through cash, but this is expected to plunge by 2020 as demand increases for various digital payments services – from mobile wallets and mobile point-of-sale to electronic payments.
“By 2020, the UAE will be realising an anytime, anyplace approach to payments, a fascinating new dynamic that will allow for greater economic inclusion of the unbanked and under-banked across the country. We see strong nationwide demand for a multipurpose, cross-bank mobile wallet,” says Ahmed Fasih Akhtar, Co-Founder and Chief Executive Officer of UAE-based digital payments service startup Trriple, on the sidelines of the 35th Annual GITEX Technology Week in Dubai.
It is also the trend worldwide that consumers and businesses prefer digital payments over paper money.
Analysts say Sweden will soon become the first cashless society as the country goes along with the advancement of technology.
“Cash is still an important means of payment in many countries’ markets, but that no longer applies here in Sweden. Our use of cash is small, and it’s decreasing rapidly,” says Niklas Arvidsson, a researcher at KTH Royal Institute of Technology in Sweden.
Reports suggest that by the end of 2016, the total number of consumer non-cash payments alone will beat the number of cash payments in the UK.
Meanwhile, various studies have indicated that e-commerce in the UAE, the largest e-commerce market in the Middle East, is growing at a fast pace. According to research firm Frost & Sullivan, it is worth nearly $2.5bn a year and is expected to grow to $10bn by 2018. Local retail website Awok.com has revealed that nearly 46 per cent of Dubai residents purchase goods online.
According to a survey of purchasing behavior by payment solutions provider Network International, one among three residents in the UAE makes one to five online purchases in a week.
The study also finds that, among the residents surveyed, five per cent make online purchases more than five times a week.
(S1 = AED3.67, at the time of publishing)