Credit cards and digital wallets have become the most popular methods for e-commerce transactions in the UAE, according to the FIS Global Payments Report 2023.
Credit cards accounted for 41 per cent of e-commerce transaction values in the UAE while debit cards represented 11 per cent.
Wallets were responsible for 24 per cent of transaction values – up from 23 per cent in 2021, the study finds. Meanwhile, on-delivery accounted for only seven per cent of e-commerce transactions last year.
“A similar picture emerges at the point of sale [POS], where credit cards were responsible for 40 per cent of transaction value, with debit cards earning 17 per cent share,” said the report.
“Cash accounted for 18 per cent share at POS. Wallets are growing even faster at POS, growing from a 13 per cent share in 2021 to a 16 per cent share in 2022. Consumers in the UAE can choose from among the world’s biggest wallet brands, such as Alipay, Apple Pay, Google Wallet, Samsung Wallet and WeChat Pay, as well as domestic wallets like Careem Pay, e& money [Etisalat Wallet] and Payit.”
This report comes as cash use is dwindling around the world, paving the way for the rise of credit and debit cards and buy-now-pay-later solutions.
Nearly two-thirds of the UAE residents expect the country to go fully cashless by 2030, according to a 2020 poll by Standard Chartered.
The UAE also ranked as the eighth most cashless society in the world in 2021, according to UK price comparison website Money.co.uk.
Although still in its nascency, the BNPL methods are quickly gaining steam in the UAE, according to GPS 2023 report.
In the UAE, BNPL doubled its share of transaction values to two per cent last year.
“The UAE is a centre of BNPL development, with domestic BNPL providers such as Cashew, PostPay, Spotii and Tabby competing with regional providers like Saudi Arabia’s Tamara,” according to the study.
The report forecasts that BNPL would continue to grow in the UAE’s e-commerce sector at a compound annual rate of 37 per cent through 2026.
BNPL has also become the Mea’s fastest-growing e-commerce payment method. The report estimates the method will grow at a compound annual rate of 43 per cent in the region through 2026, the report said.
At the same time, the Mena region also witnessed a dramatic decline in cash use at POS transactions, plummeting to 43 per cent last year from 73 per cent in 2018. Moreover, the report predicts that the share of cash transactions would stand at just 29 per cent by 2026.
“The shift from cash is mirrored by the rise of digital and mobile payments, which is driven by governments, banks and FinTechs,” the report claimed.
“Mobile money transaction values in 2021 grew fastest in the Middle East and North Africa [49 per cent], followed by Sub-Saharan Africa at 40 per cent, according to GSMA.”
Already becoming Mena’s second-leading e- payment method with a 20 per cent share of transactions, digital wallets are poised to grow at a 25 per cent compound annual rate through to 2026, when they are expected to reach a 27 per cent share of e-commerce transaction values, according to the report.
Credit cards still enjoy the highest share of regional e-commerce transaction values at 31 per cent and are forecast to maintain this share through to 2026, despite a lower penetration in the Mena region due to religious reasons,
Account-to-account transfers are the third leading e-commerce payment method following credit cards and digital wallets, accounting for 18 per cent of regional e-commerce transaction values last year, the report said.
