Cashless payments are growing faster than expected in the UAE in light of the ongoing coronavirus crisis which has encouraged more shoppers online, according to a top Dubai business official.
Sami Al Qamzi, director general of Dubai Economy, the government’s business arm, said: “The increasing shift to digital payments is not only a strong testament to the efficiency of the infrastructure and regulatory framework in the UAE, but also an indicator of the growing confidence among consumers and businesses in the country.
“Dubai Economy has prioritised digital payments as a key enabler of the ease of business and smart transformation that will set Dubai apart as a competitive global business hub.”
He added: “Cashless payments and e-commerce are definitely on a faster trajectory than anticipated, and we look to translate this unprecedented growth into an opportunity for businesses of any size to establish and enhance their presence online.”
His comments follow a new joint study by Dubai Economy and Visa which said the UAE e-commerce sector is expected to see continued growth as more UAE consumers demand online payment options and merchants increasingly recognise the need for an online presence during the coronavirus pandemic.
With many consumers and merchants experiencing the convenience of e-commerce for the first time during the lockdown, the shift to shopping online is expected to hold long-term as consumer confidence in digital payments surge across the region, the report added.
The shift to paying online also means e-commerce will account for a bigger share of total UAE card payment transaction values in 2020, compared to pre-pandemic predictions, estimated to account for 28.2 percent of the total.
Based on the latest transaction data from Visa, the report also compares the UAE to mature and emerging benchmark markets including the US, UK, Australia and Singapore, as well as Brazil, South Africa and Malaysia.
According to the report, in the wider Middle East, North Africa, and South Asia (MENASA) region, the UAE represents the biggest annual spend per online shopper at $1,648.
Additionally, the UAE continues to maintain a healthy lead in average transaction size compared to both mature and emerging eCommerce markets.
The average transaction value in the UAE was $122 in 2019-20, compared to $76 in mature markets, and $22 in emerging markets.
With more merchants going online and a wider selection of products available in the e-commerce space, consumer demand and online sales volumes have also multiplied, the report added.
Marcello Baricordi, Visa’s general manager for Middle East and North Africa, said: “The digital payments ecosystem in the UAE and wider MENA region was already experiencing strong growth, but the pandemic has helped accelerate the pace of change and progress.
“We’ve seen a number of adoption barriers reduce as the demand for e-commerce and contactless commerce skyrocketed during the lockdown. We call these habit forming behaviours as more consumers and merchants have now experienced the security, convenience and range of online commerce and we anticipate this trend to continue post-pandemic.
“All merchants regardless of size must now think beyond just adapting and focus on their medium and long term strategy.”
Bringing in-store experiences online will be important to retain recent online shopping converts, the report said, adding that the ability to experience a product is a key reason for in-store shopping but augmented reality technologies can replicate this online.
However, according to the report some challenges remain in the UAE. More than half (58 percent) of UAE consumers surveyed by Visa in 2020 were found to have abandoned their online shopping cart because of authentication delays or failure.
The report added that while almost every business has been impacted by the pandemic in some way, small businesses have struggled the most. Helping small merchants move online so they can survive challenging market conditions must be a priority for the communities they operate in, it noted.
“With the perfect set of supportive factors – from digital-friendly policies to relief measures, high internet, smartphone and social media penetration, and world-class infrastructure – there is no market better equipped than the UAE to take e-commerce and the payments ecosystem to the next level,” said Baricordi.
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