VISA, the global payments solutions provider, has shared its 2021 outlook for the payments sector in the UAE and internationally.
2020 was a transformative year in terms of how consumers pay for goods and services. While innovations like contactless payment have existed for quite a while, their adoption, at least regionally, was a bit stunted. In a region still enamored with cash and the traditional ways of payment, as we see with the popularity of cash on delivery payment option with e-commerce, contactless payments had not taken off as much as they have worldwide.
Enter 2020 and COVID-19, and this was suddenly turned on its head. Businesses and governments were now encouraging consumers to opt for contactless payment, both for convenience and safety. The coronavirus quickly established itself as a venerable threat to our health, economies and entire nations, and something as minor as a contactless payment could go a long way to halt its spread.
As we now step into 2021, VISA says that businesses are embracing digital payments more rapidly than ever before. The third edition of VISA’s global research study, “VISA Back to Business Study – 2021 Outlook,” conducted in Brazil, Canada, Germany, Hong Kong, Ireland, Russia, Singapore, United Arab Emirates (UAE) and United States, found that both the continued SMB shift towards digital commerce and changing consumer payments habits show few signs of reversal as the calendar advances into 2021.
According to the study, by the end of 2020, nearly all (97%, compared to the global average of 83%) of SMBs surveyed in UAE had embraced new forms of digital technology to meet changing consumer behaviors. Looking ahead to 2021, SMBs are assessing what other payment technologies are critical to meeting today’s consumer expectations, with results led by security and fraud protection (54%) and allowing installments for online payments (49%, compared to 35% globally, the most of all markets surveyed).
“While there had been a sudden surge in eCommerce and digital payments in 2020 due to the impact of COVID-19, our report suggests that these trends will continue to prevail in 2021, even as the vaccines become more widely available in the country and the wider region,” Shahebaz Khan, General Manager for the UAE, Visa, said. “In addition, we believe 2021 will place greater attention on security and fraud, and trial of more emerging digital commerce tools that can help SMBs in the UAE thrive.”
The report highlighted that digital-first mindsets will help power business forward and win consumer mindshare in 2021:
The Road to Recovery for SMBs in 2021
Contactless Payments Are Here To Stay: The global rise of contactless payment offerings in 2020 spurred by challenges including consumers looking for safer ways to pay amidst the pandemic, is showing no signs of slowing down in the New Year. In fact, in June 2020, 44% of UAE’s SMBs surveyed were offering contactless payment for the first time – now, the same proportion (44%) say they are doing it more often, and of those, 73% plan to continue doing it over the next three months. Over 4 in 5 (86%, compared to 74% globally, the most of all markets surveyed) SMBs surveyed expect consumers to continue preferring contactless payments even after a vaccine is widely available.
SMBs Meet Consumers Where They Are: SMBs have steadily increased their efforts to meet consumers where they are now: online. In the UAE, 97% of SMB owners have made updates to their operations in the past three months to meet these new demands for digital payments, up from 94% in summer 2020 when the first Visa Back to Business Study was released.
The Fight Against Fraud: At 94%, SMBs in the UAE are the second most likely of all markets surveyed after Hong Kong (96%) to have encountered customer concerns about fraud over their new use of technology (compared to 70% globally), presenting an obstacle to maintaining positive engagement with their customers. Recognizing the significance of and responding to a potential fraud attack will continue to be critical in 2021 as the shift to digital sales continues to increase.
New Year Brings a New Era for Consumer Habits
Consumer Preference: Almost overnight, consumers put COVID-19 safety measures at the top of their shopping lists, igniting a rapid shift to touchless commerce. Seventy-seven percent of UAE consumers (compared to 65% globally) surveyed would prefer to use contactless payments as much as or even more than they are currently using it. And just in the last quarter of 2020, 62% of consumers have used contactless payments whenever possible. In fact, of all markets surveyed, the UAE consumers emerged as those that are the least likely to plan to shop more in-person (37%, compared to 53% globally) even after a vaccine is widely available.
Safety-Conscious Shoppers: While the universal focus is on mask use in stores, consumers are also eager to have payment alternatives to handling cash, pens and keypads. In the UAE, 74% of consumers (compared to 47% globally) say they will not shop at a store that does not offer a contactless way to pay. The vast majority of UAE consumers surveyed (93%, compared to 85% globally) expect digital options when they shop in person, more so than any other market surveyed. Tapping a credit or debit card is the most preferred option (57%), followed by paying with a mobile wallet (51%, compared to 36% globally) and mobile payment apps (44%).
At the Card Wash: Card cleanliness remains key for consumers in the fight against the spread of COVID-19. Nearly all the UAE consumers surveyed (96%, compared to 61% globally) are taking steps to keep their credit card clean, making them the most likely of all markets to do this.