Monthly online shopping among UAE residents has surged 140 percent since 2020, according to a new report by fintech firm Checkout.com.
For the past four years, checkout.com has been tracking trends in online purchasing behavior among residents across the Emirates.
Based on their findings, digital payment volumes soared by 78 percent last year- indicating a permanent shift in consumer habits and preference towards shopping online compared to shopping in-store.
“People and businesses in the UAE are living in a transformative era of digital commerce. This is not only characterised by a remarkable shift in preferences for digital payment methods, but a growing emphasis on payment security, leading to consumer trust,” noted Remo Giovanni Abbondandolo, General Manager for MENA at Checkout.com.
Innovations such as Automated Funds Transfer (AFT) have been pivotal in driving this e-commerce boom. These type of instant and seamless payments make it easier for consumers to track their spending and user experience online. Also the significant adoption of payment options such as “buy now, pay later” comes as consumers increasingly report a positive experience using these payment solutions.
“In this respect, the UAE’s embrace of advanced infrastructure, platforms, and policies is clearly yielding impressive results, which are evident in the expansion of digital commerce volumes and the adoption of its payment tools by merchants across all industries,” Abbondandolo added.
However, payment security remains important for online shoppers, with 36 percent of consumers having highlighted payment security as their top concern when shopping online. This sentiment that aligns with the 35 percent of UAE consumers who have reported being victims of online payment fraud.
According to the report, some 23 percent of the surveyed consumers in the region said they would jump to a competitors website following a single falsely declined payment.
“Whilst ease of use is key for payments, security is the foundation for consumers’ trust. Finding the right balance between usability and security is crucial for fostering a healthy relationship between merchants and end users in the world of payments. By prioritising both ease of use and robust security measures, businesses can instil trust and confidence in their payment systems, retain their customers, and ultimately enhance the overall customer experience, and their overall payment performance,” said Abbondandolo.
E-commerce diversifies beyond essentials
A trend evident in this year’s report, is the significant growth in digital commerce across various retail sectors, moving beyond the conventional focus on essential items such as food, groceries, and clothing.
Instead, consumers are purchasing everything from household items to luxury products, showing confidence in the digital e-commerce space.
Over half of UAE online shoppers now purchase clothes and fashion online, followed by electronics and food and meals both at 53 percent, and groceries at 46 percent.
With these figures, research by YallaHub suggests that the UAE’s e-commerce market could hit $17 billion next year.
The demise of cash
The report also marks a significant shift away from cash on delivery when ordering goods online.
“When we first started to track consumer behavior and sentiment in 2020 we observed that ordering online did not necessarily mean paying online” checkout.com stated in their report.
This has changed. In the past 48 months, there has been nearly a 40 percent decline in cash payments on delivery.
This shift mirrors a broader trust in and acceptance of digital payments, with 74 percent of UAE consumers indicating they would opt for card payments if cash on delivery was not an option.
in the past few years, letting go of cash has been particularly encouraged and embraced in the UAE and now only represents as little as 10 percent of the population who prefer cash as a payment option.
The rapid adoption of digital wallets, such as Apple Pay and Google Pay, which have seen significant growth rates between 2020 and 2023, has definitely fueled this trend.
“As confidence in digital payment methods grows, it is not a surprise to see a decline in the preference for cash of delivery as a payment method. This presents a unique chance for businesses to keep their costs down. With new technologically advanced payment solutions presenting a more scalable and consumer-friendly experience, the complexity and cost of legacy operations for businesses will continue to decline,” added Abbondandolo.
Similar trends across the region
Across the wider MENA region, the growth momentum is equally impressive. The overall volume of digital payments in MENA has grown nearly seven-fold, 658 percent, since checkout.com started tracking consumer online spending habits.
Overall, the number of shoppers in the Middle East who make online purchases at least once per day has jumped 80 percent over the past four years.
Growth has been particularly significant in Saudi Arabia, where daily online shopping has soared by 90 percent, meaning that an estimated 2.6 million consumers in the Kingdom now pay for items online every day, compared to just 1.4 million four years ago.
The increase in spending demonstrates the resilience and robustness of the economy not just in the UAE, but across the wider MENA region.
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