Adoption of a broader range of digital payment methods is accelerating in the UAE and the technology fueling the future of payments is already here, according to Mastercard’s New Payments Index 2022.
The report highlighted that with UAE consumers being increasingly aware of solutions such as cryptocurrency, digital cards, biometric payments, BNPL (Buy Now Pay Later) and open banking, many of the actively using these solutions in their everyday lives.
Mastercard’s New Payments Index 2022 found that 88 percent of people in the UAE have used at least one emerging payment method in the last year.
Of these, 39 percent used a tappable smartphone mobile wallet, 29 percent used BNPL, 20 percent used cryptocurrency and 18 percent used a payment-enabled wearable tech device.
Consumers are also making purchases in increasingly diverse ways, including through voice assistants and social media apps.
The study noted that while traditional payment methods still have traction, 29 percent of consumers in the UAE indicated they used less cash in the past year.
It further revealed that by contrast, 66 percent of UAE users (compared to 61 percent globally) increased their use of at least one digital payment method in the last year, including digital cards, SMS payments, digital money transfer apps and instant payment services.
Moreover, while crypto use was low, 40 percent of cryptocurrency users in the UAE say they have used it more in the last year. These behaviours are expected to continue, with comfort and security key to growing adoption.
The Index confirmed security is top of mind when deciding what payment methods to use, globally and in the UAE (36 percent). In the country, security and rewards are main considerations, followed by promotions and ease of use.
Highlighting sustainability as a key driver in the region, 36 percent of UAE consumers said they also consider social and environmental benefits.
“It is exciting to see the increased adoption of emerging payment methods and consumers’ eagerness to reap the benefits of the digital economy in the UAE and across the region. Mastercard is committed to understanding the needs and preferences of the people in the markets we serve, and we will continue partnering with the public and private sectors to develop market-relevant solutions as we build an inclusive and connected digital future that works for everyone,” said J.K. Khalil, Cluster General Manager, MENA East, Mastercard.
UAE consumers need a deeper understanding of blockchain tech and NFTs
The Mastercard study also highlighted that broad mainstream awareness of cryptocurrency (95 percent) and NFTs (non-fungible tokens) (86 percent) exist, though depth of understanding about both currencies and the underlying technology is lacking, with three in four (74 percent) UAE consumers agreeing they would use cryptocurrency more if they understood it better.
Encouragingly, consumers are looking for more education, security, and flexibility to manage crypto assets, the report revealed.
BNPL becoming a budgeting tool
The majority of UAE consumers have heard of BNPL with 87 percent saying they are familiar with the concept, and almost half (46 percent) are already comfortable using it today. Consumers want the flexibility and convenience of BNPL, but with the sense of security associated with a trusted provider like a bank or payment network.
Consumers also find BNPL useful for unique use cases, including as a budgeting and financial planning tool.
Embracing fintech
Mastercard also found that consumers are relying on digital finance options for their everyday financial tasks. It found that eight in ten (81 percent) know about open banking, and are using it to pay their bills, do their banking, secure or refinance loans, and make BNPL payments.
It also revealed that over half (55 percent) of UAE consumers feel safe using apps to send money to people or businesses from their phone.
Surveyed consumers also recognised the convenience and security that biometrics offer, with 71 percent agreeing it is easier to make payments using biometrics than a card or device.
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Tech-savvy population
Mastercard also underscored that younger generations have gone more digital in their purchasing and payments behaviour, and their engagement in and usage of emerging digital payments engagement is accelerating at a faster rate than older audiences.
Across the UAE, Gen Z is least likely to use cash or make in-person purchases and payments. They are proactively seeking out new payment methods, and nearly two thirds of Gen Z (64 percent) in the UAE are likely to have obtained a new digital payment alternative (e.g. digital wallet, click-to-pay account) compared to only 22 percent of Boomers.
