The UAE’s payments environment is changing quickly, moving away from reliance on cash and toward acceptance of digital payments. Due to the region’s digitally savvy population and evolving consumer tastes, cashless payment systems are gaining prominence. With the spread of digital payments in UAE, businesses profit from better cash flow management, real-time data access, and enhanced productivity. The Smart Dubai Initiative propels this change further and gives companies a competitive edge in the expanding digital payments industry.

The Government of Dubai’s Cashless Dubai Initiative, launched in late 2019, achieved success amid the COVID-19 pandemic, becoming prominent for its significant impact. 

The task of developing and implementing a roadmap for an orderly transition to cashless payment systems in the Emirate has been given to the Cashless Dubai Working Group, which comprises Directors General from pertinent local authorities and partners, including central banks. This program aligns with the government’s Smart Dubai project, which aims to make the city a model smart city globally.

The working group has selected six main priority areas:

  • Government services
  • Peer-to-peer transactions
  • Retail and related services
  • Unbanked and underbanked people
  • Tourism

The issues of economic security and cybercrime are both significant concerns that are being tackled simultaneously. Having an Agile and enabling environment for consumer protection is just one of many enabling aspects to ensure the UAE’s success in these areas.

Strong public-private cooperation is necessary to successfully introduce cashless payment methods in Dubai, with a focus on startups. Crowdsourcing and innovation will produce quick, dependable technology, improving Dubai’s economic competitiveness and helping the entire region.

One market innovation worth noticing was a unified payments network developed with the Dubai Department of Economic Development. This network allows startups to integrate their APIs, which is helpful for both customers and businesses. Companies with available APIs are encouraged to contact

with the appropriate department to have a functional system.

Source: Issuu

The Rise of Digital Payments in the UAE: Shifting from Cash to Contactless

The Middle East has been a cash-dependent society. Despite this, the region’s digitally adept population and changing factors are gradually paving the way for contactless payment solutions in the UAE. Digital payments in the UAE saw rapid development even before the pandemic hit, with yearly transaction rates exceeding 9% from 2014 to 2019. According to McKinsey research, this exceeded Europe’s growth, which ranged from 4% to 5%.

As the world embraces the cashless economy, digital payment systems have taken the lead, representing over two-thirds of global transactions (excluding the US). This shift is even more evident in the Gulf Cooperation Council countries like the UAE and Saudi Arabia. According to Dr. Saeeda Jaffar, Visa’s group country manager for the GCC, more than two-thirds of transactions are conducted using tap-to-pay or contactless methods. In Saudi Arabia, 9 out of 10 transactions, and in the UAE, 8 out of 10 transactions happen with contactless cards or devices.

Digital Payments in UAE

The payment systems across the GCC are evolving with the changing behavior and preferences of consumers and vendors. The Small Business Recovery 2021 report by Visa found that 84% of retailers in Saudi Arabia and 60% in the United Arab Emirates claimed their clients prefer contactless payments.

82% of Emirati business owners agree that investing in digital payments is essential for company development as customer preferences change. E-wallets in UAE are quickly becoming the preferred payment option for regional customers. According to the McKinsey analysis, 60% of respondents believe that e-wallets will significantly impact digital payment methods in the area.

Benefits of Digital Payments for Increased Business Growth in Dubai

According to a VISA study, moving toward a cashless society could result in direct yearly net benefits for consumers, companies, and governments of US$2.2 billion (more than AED 8 billion). As soon as a mature level of cashlessness is attained, the estimated gains are $0.5 billion for governments, $1.5 billion for businesses, and $0.2 billion for consumers.

Let us focus on some of the top benefits of the digital payment ecosystem for businesses in Dubai – 

  1. Increased Speed

Cashless payment methods in Dubai can enable businesses to operate more quickly and efficiently by removing the need to wait in line at ATMs or banks to deposit or withdraw money. With digital transactions, transfers between accounts happen instantaneously, eliminating delays. This constant cash flow produces a more advantageous and productive corporate environment, encouraging expansion and raising client satisfaction.

  1. Quick and Error Free Accounting

Businesses in Dubai can save time on cash accounting at the end of the day by implementing digital payments. This lessens the workers’ workload so they may quickly leave for the day. It also reduces the likelihood of mistakes, which boosts efficiency and accuracy in accounting.

  1. Participation in the Smart Dubai Initiative

Embracing cashless payment channels aligns businesses with the government’s Smart Dubai drive, contributing to the Emirate’s transformation into a global Smart City. The Government of Dubai is keen on the growth of digital payments as this will also improve financial inclusion in the Emirates. 

The cashless payments ecosystem, developed with the help of a software product engineering company in Dubai, is one of the critical pillars of UAE’s smart transformation. Aligned with the leadership’s long-term vision, the initiative is critical to enhancing various entities’ efforts to create a smart and safe economic environment for businesses in Dubai.

  1. Access to Data

The accelerated adoption of digital payments can help businesses in UAE obtain real-time consumer data. This will allow them to spot new trends and patterns. Retailers can leverage data-driven insights for individualized marketing and strategic planning. Governments may also use the quantity of data generated by digital payments to make better policy decisions and more accurate economic forecasts.

  1. Better Cash Flow and Sales

The growth of digital payment transactions provides companies with better cash flow management through real-time transaction tracking, lowering the risks of managing physical currency. Accepting various cashless payment options also draws in a larger consumer base, especially visitors, eventually boosting sales and profitability.

  1. Cost Saving

Digital payment infrastructures enable real-time transaction tracking, which improves cash flow management. By adopting digital payment infrastructures, the authorities in Dubai can ensure a simplified cash management procedure for businesses, large and small. It lowers the risk of theft and leads to significant cost savings for organizations and merchants. 

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Conclusion

The landscape of digital payments in the UAE is rapidly evolving, transforming how businesses conduct transactions. The region’s digitally adept population and changing consumer preferences drive the shift towards cashless payment methods. Embracing digital payments offers companies numerous advantages, including increased efficiency, better cash flow management, and access to valuable customer data. Innovative fintech, digital payment solutions, and a robust digital payment system further facilitate this evolution.

Mena Region Digital Payment Trends

By participating in the Smart Dubai Initiative, businesses align with the government’s vision for a smart city and contribute to the region’s economic growth and prosperity. With the continuous growth of cashless payment solutions, the future holds immense potential for businesses to thrive in a cashless economy. The businesses in Dubai and the Middle East as a whole can partner with FinTech software development companies like Tntra to design the best infrastructure for their economic growth.

Are you an enterprise looking to integrate cashless transaction features in your business model? Contact Tntra, a trusted software product engineering services company in UAE. Leverage Tntra’s unique FinTech methodology and join us on a journey closer to a cashless and decentralized financial system in Dubai. 

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