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Payments Landscape in the UAE: Opportunities and Risks to 2022

Payments Landscape in the UAE: Opportunities and Risks to 2022

Summary

Cash remains the preferred method of payment in the UAE, accounting for 82.0% of total payment transaction volume in 2018. However, consumers are gradually shifting towards electronic payments as both awareness and the benefits associated with cards increase. Growth in card payments has been supported by the government’s financial inclusion initiatives, the central bank’s implementation of EMV-compliant cards, banks and financial institutions’ reward programs, and the adoption of newer payment technologies.

Financial inclusion remains a key priority in the UAE. The government’s electronic payroll service, Wage Protection System (WPS), has brought a large number of unbanked consumers into the mainstream financial system. Under WPS the government requires the payment of salaries via digital channels through banks or other financial institutions. In April 2018 the government introduced Emirates Blockchain Strategy 2021. The strategy aims to use blockchain technology for 50% of government transactions in order to reduce costs and free up resources over the next three years. The adoption of blockchain technology is expected to generate AED11bn ($3bn) in savings associated with transaction and document processing.

According to the Central Bank of the UAE, salaries worth AED220m ($59.9m) were transferred between 2013 and 2017. Furthermore, immigrants accounted for 88.4% of the UAE population in 2017. Banks such as Emirates NBD offer special bank accounts and prepaid cards for immigrants residing in the UAE, allowing them to access banking services and transfer money back home.

Debit cards are the most popular card type in terms of circulation, although pay-later cards in circulation recorded a compound annual growth rate (CAGR) of 6.0% during the review period (2014-18e) and are widely used for card payments. The UAE e-commerce market grew strongly during the review period, recording a CAGR of 19.1%. The government has undertaken a number of initiatives - including the introduction of free trade zones specifically for e-commerce companies - that are likely to further boost e-commerce.The report Payments Landscape in the UAE: Opportunities and Risks to 2022, provides top-level market analysis, information and insights into the Emirati cards and payments industry, including -

  • Current and forecast values for each market in the Emirati cards and payments industry, including debit, credit, and charge cards
  • Detailed insights into payment instruments including cash, cards, credit transfers, direct debits, and cheques. It also, includes an overview of the country's key alternative payment instruments E-commerce market analysis
  • Analysis of various market drivers and regulations governing the Emirati cards and payments industry
  • Detailed analysis of strategies adopted by banks and other institutions to market debit, credit, and charge cards
Companies mentioned: Emirates NBD, Dubai Islamic Bank, First Abu Dhabi Bank, ADIB, Emirates Islamic, Abu Dhabi Commercial Bank, RAKBANK, Mashreq Bank, HSBC, Commercial Bank of Dubai, Standard Chartered, Citibank, National Bank of Abu Dhabi, First Gulf Bank, Mastercard, Visa, American Express, Diners Club.

Scope
  • To strengthen consumer confidence in card-based payments, the Central Bank of the UAE issued a notice prohibiting the double-swiping of payment cards at point of sale (POS) terminals. The move is intended to prevent unauthorized storage of card holders’ information. Once the card is swiped for the first time at the POS its details are briefly stored within the POS terminal’s memory before being transmitted to the payment processor. The second swipe might provide the opportunity for malware installed on the terminal to copy the card data. According to the central bank, almost all merchants in the country have complied with the new regulation.
  • To boost the e-commerce market, in October 2017 the Dubai Airport Free Zone Authority and wasl Asset Management Group announced the launch of e-commerce free zone Dubai CommerCity, the first free zone dedicated to e-commerce in the Middle East and North Africa. The free zone is designed to provide government, administrative, customs, and logistics services to e-commerce companies. It allows local and international manufacturers to store their goods in warehouses to be shipped to the local market. Free zones offer various incentives to e-commerce traders, such as no taxes on personal income or capital gains, no corporate taxes, no duties on the import or export of goods, provision of 100% foreign ownership, and 100% repatriation of capital and profits. The rise in e-commerce activities will drive electronic payments in the country.
  • In April 2018 the government introduced Emirates Blockchain Strategy 2021. The strategy aims to use blockchain technology for 50% of government transactions in order to reduce costs and free up resources over the next three years. The adoption of blockchain technology is expected to generate AED11bn ($3bn) in savings associated with transaction and document processing.
Reasons to buy
  • Make strategic business decisions, using top-level historic and forecast market data, related to the Emirati cards and payments industry and each market within it.
  • Understand the key market trends and growth opportunities in the Emirati cards and payments industry.
  • Assess the competitive dynamics in the Emirati cards and payments industry.
  • Gain insights into marketing strategies used for various card types in the UAE.
  • Gain insights into key regulations governing the Emirati cards and payments industry.


Market Overview
Executive Summary
Card-based Payments
E-commerce Payments
Mobile Proximity Payments
P2P Payments
Bill Payments
Alternative Payments
Payment Innovations
Payments Infrastructure & Regulation
Appendix

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