How Covid-19 propelled the UAE’s digital payments space

The outbreak of the Covid-19 virus has proven to be an ‘inflection point’ for much of the world.

Of all the changes that have taken place to mitigate and manage the crisis, digital adoption by consumers and businesses has arguably remained the most profound, compressing years of technological transformation into months.

Organisations expanded their digital offerings, while consumers increased their reliance on online and mobile channels to conduct day-to-day activities. Increased digital activity also drove up the volume of digital payments. Months after the outbreak, digital payment transactions not only form part of the ‘new normal’ but are expected to outlive it too.

FAVOURABLE TRENDS
Few trends will shape the payments industry globally over the next five years.

The Covid-19 pandemic will accelerate cash to non-cash conversion and boost e-commerce growth in select categories, while industry consolidation will continue to shape the competitive environment, a new report by Boston Consulting Group (BCG) predicts.

“In the short term, most players in the payments industry are likely to see revenue growth contract. But favourable trends such as the shift to contactless payments, the growing adoption of digital wallets, and the more widespread use of business-to-business (B2B) payments automation will lift the industry’s prospects longer term,” the report explains.

Regionally, the GCC countries have witnessed considerable growth in digital payments over the years. This trend has continued to gather force in the current year, despite underlying economic conditions that may have dented consumer spending. Governments, financial institutions and payment service providers are also expanding their offerings to underpin this sector’s growth.

A survey by Dubai Police, Dubai Economy and Visa earlier this year revealed that 68 per cent of respondents in the UAE have reduced shopping in-store since the outbreak of the pandemic, while 49 per cent shop more online.

Meanwhile, 71 per cent are using digital payments over cash in case of in-store shopping. Consumers’ behavioural patterns may well be enduring – 43 per cent of the surveyed consumers believe that they will continue to use contactless payments more in-store after the pandemic too. While the payments industry may be evolving rapidly, there are areas that need to be addressed. Companies in this space that address five imperatives will emerge as the winners in the post crisis world, the BCG report explains.

These priorities include: rebalancing the product and customer portfolio; pursuing strategic M&A, partnerships, and ecosystem opportunities; becoming a data-driven organisation; reinforcing risk management; and accelerating digital transformation.