The rapid transformation of the financial services landscape in the United Arab Emirates is expected to significantly increase the country’s payment revenues to $18.7 billion by 2031, from $3.0 billion in 2021.
Following the UAE’s continued efforts to accelerate the digitalization of its financial services ecosystem, more than half of consumers in the country are expected to be cashless by 2024, compared to a global average of 41%. The country is also pursuing initiatives to build financial market infrastructure that will enable instant payments in the Emirates, the UAE Central Bank has said.
According to a study by the Boston Consulting Group (BCG), the payments industry in the United Arab Emirates is expected to register a compound annual growth rate (CAGR) of 7.7% between 2021 and 2031 on revenue. Particularly strong areas will include revenue from credit cards, debit cards and checking accounts.
“The UAE continues to experience robust growth in payments and fintech activity in general. This year alone, we have seen the launch of several digital banks as well as players specializing in payments,” said Mohammad Khan , Managing Director and Partner, BCG.
He said a combination of factors such as the country’s young, tech-savvy and rapidly growing population, the country’s bid to become a crypto and fintech hub, and the planned launch of a national payment system drive greater competition and pave the way for future growth. “Cross-industry participation in digital payments will add further momentum to the region’s already booming industry,” Khan said.
In 2021, aided by the accelerating digitization of financial services, CBUAE’s payment systems remained robust without interruption, leading to the processing of a total of 231 million transactions, for an amount of 11 billion dirhams ( approximately $3 billion).
In particular, the Instant Payment Instruction (IPI) system, offering real-time instant domestic funds transfers, saw a significant increase in transaction volumes, confirming the trend of increased use of digital payments over traditional methods. money transfer methods, according to industry data.
According to payment solutions provider Checkout.com, online payments and the use of digital wallets have increased during the pandemic, with more than half of all residents now transacting online.
According to the BCG report, payments revenue in the GCC will experience acceleration thanks to real-time payments infrastructure, a growing number of specialized payment players bringing new solutions to market, and enabling government policies. .
It outlines several trends that will shape the outlook for the global payments industry, which has some impact on the UAE, over the next five years. A key trend is that with the growing demand for electronic payments, the sustained conversion of cash to cash, the continued growth of e-commerce and the increasing integration of payments into retail and enterprise customer journeys will drive payments revenue worldwide. Central bank digital currencies (CBDCs) are also gaining momentum. Central banks are adapting CBDCs to supplement liquidity with central bank digital currency to implement monetary policy more quickly.
As payment businesses come under increasing scrutiny from regulators, market participants need to consider the dimensions of risk, whether financial, compliance, cyber or crypto to install the required protections to their businesses on the path to growth, BCG said.
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