International Business Practices, Dubai - Project 2

A report submitted to

Prof. Mahesh Rao

In partial fulfillment of the requirements of the course

International Business Practices

By

Parikshit Mishra

Roll No. 2111204

On

03 – 07 – 2022
Payment Landscape in UAE

Middle Eastern financial systems are at a turning point. Despite having a population that is
highly tech literate and smartphone penetration rates of between 80 and 90 percent in key
markets, the region has remained highly dependent on cash. Due to issues like inadequate
digital payment infrastructure and services, underbanked customer and merchant groups, and
a cultural preference for cash, only roughly a third of retail transactions are made
electronically. New legislative and regulatory initiatives as well as the introduction of new
local, regional, and international payment providers are hastening change, nevertheless.
Additionally, as it has in other countries, the COVID-19 pandemic has sparked an increase in
digital use and a flight from cash.

Digital Adoption

The popularity of digital payments was rising quickly even before the outbreak. In
comparison to Europe's average yearly growth rate of 4 to 5 percent, the number of consumer
digital payments transactions increased in the United Arab Emirates (UAE) between 2014
and 2019 at a pace of more than 9 percent annually. More dramatically, Saudi Arabia had a
staggering increase in card payments of almost 70% between February 2019 and January
2020.
The epidemic has increased these already extraordinary growth rates. More than three-
quarters (80%) of the payments professionals who participated in McKinsey's survey felt that
noncash payments had increased by more than 10% across the region as a result of the
pandemic, and 43% thought the increase exceeded 20%. Even faster rates of development are
indicated by data from some nations, such as Saudi Arabia, where digital point-of-sale (POS)
transactions doubled in the year leading up to January 2021.
Additionally, payments professionals anticipate that the switch to digital payments will last
forever: according to the poll, 90% of respondents thought that at least 50% of new users
would continue with digital payments rather than subsequently switch back to cash.
Additionally, more than half of survey participants predicted that noncash payment growth
will remain high over the following five years, leading to a regional rise in digital transaction
volume of more than 50% over 2020 levels.

Future Payment Ideas for Professionals

Idea 1: Increase in the use of Digital Wallets. Special cashback schemes for regular users.
Idea 2: Account to Account transfer can be incentivized for corporates as they have the
maximum usage for such payment methods.