Mobile payment in UAE expected to post strong growth over the next five years

Print

Email

Smartphone penetration in UAE is estimated to be more than 85% in 2015. However, cash based transactions still constitute over 75% of all the transactions. Smartphones are becoming increasingly affordable to the young and affluent population in the country. This is driving mobile commerce, which is expected to grow over 35% in 2016. The growing trend in the adoption of smartphones and ecommerce has attracted the attention of banks and banking regulators to expand the availability of mobile wallets. Moreover, the country intends to become cashless by the end of 2020 by increasing the adoption of cards and mobile payment devices.

As part of UAE’s Smart Government initiative, Central Bank of the UAE has approved the UAE Banks Federation’s (UBF) mobile wallet project for implementation in May 2015. The project aims to promote the issuance of mobile wallet apps by the 17 banks that are participating in the program. UBF expects that implementation of the m-wallet project will reduce the use of cash by AED50bn (US$13.60 bn) over the next five years. Mobile wallet apps utilize near field communication (NFC) technology to allow consumers to make payments by tapping their mobile device at POS terminal. It is understood that merchants and payment partners are currently upgrading their payment terminals to enable such payments for consumers. Furthermore, once the project becomes operational, banks will manage their m-wallet apps individually with an overall supervision and regulation by the Central Bank.

The country’s cashless journey began in early 2014 when Mashreq introduced contactless payment technology named “Tap n Go”, which enables the bank’s customers to make payments via their mobile devices. In the same year, MasterCard too rolled out its mobile wallet, MasterPass. In April 2016, Dubai based National Pay announced that as part of its plan to accelerate cashless payments in the city, it has launched DubaiCard, a reloadable prepaid card. National Pay has collaborated with Tuxedo Money and Atam and installed over 200 kiosks across Dubai which dispenses reloadable prepaid cards, travel cards in various currencies, gift cards, and a MasterCard virtual card for online purchases. The cards can be activated using a personalized PIN.

In 2016, Visa launched Innovation Center in Dubai with the objective of driving cashless payments across the UAE region. Earlier in 2015, MasterCard entered into a partnership agreement with Dubai Innovation Strategy with the objective of enhancing innovation in the consumer payments industry. These various significant moves towards building a digital payment industry is expected to boost cashless payments in UAE.

PayNXT360 believes that mobile payment in the country is expected to post robust growth across segments – m-commerce, peer to peer transfer, and bill payment. On-going government initiatives along with innovative startups are expected to drive growth and increase consumer adoption over the next five years. M-commerce and peer to peer transfer would be the two key segments driving both volume and value of transactions.

To know more and gain deeper understanding of mobile payment industry in UAE, click here.