The Power Shift in Payments
Written by Omar Abid, Product Management Team
Payments Pre Covid-19
Cash payments were strongly embedded within the GCC region before Covid-19 hit the continent. Cash transactions in UAE accounted for 72% of total transactions in 2019 (Zawya, 2019). Even though the UAE was steadily progressing towards digital finance, customers historically preferred cash with the belief that it is more convenient.
Another factor that did not help in encouraging digital payments were brick and mortar stores like sheesha cafes, bakeries, restaurants, barbers, etc. They were heavily dependent on cash-based payments to maintain their day-to-day operations. Customers did not have the purchasing power and didn’t really oppose the idea either.
However, change was inevitable.
Payments Post Covid-19
‘Dirty’ cash transactions soon became a hazardous method of exchange due to the fear of passing the virus. Customers and service providers were introduced to change that was meant to happen over several years to all happening in just a few months.
According to Visa’s Back to Business study, 92% of the companies surveyed in the UAE are shifting business online or increasing their online presence, compared to 74% globally (Zawya, 2020). BCG also estimates a 3% growth in GDP for the GCC if digital payments are further encouraged due to evolving customer preferences, improved accessibility, and higher transaction limits (BCG, 2020)
The pandemic has shifted the power, not just from cash to cashless, but also impacted the customers purchasing power. In fact, a recent Mastercard survey on the implications of the coronavirus pandemic, shows that 82% of respondents worldwide now view contactless as the “cleaner” way to pay, and 74% state they will continue to use contactless payment post-pandemic. Some even avoided withdrawing or handling potentially “dirty” cash altogether, with ATM transactions down by over 60% since lockdown began.
The Future of Payments
It is clear that digital payments are here to stay. Banks and other services will need to provide relevant solutions to promote digital payments to meet the health requirements demanded by both governments and customers. This can be achieved through an e-commerce gateway experience to encourage online payments. Take Amazon as an example, the company uses an integrated e-payment gateway to perform a transaction digitally by just a click when purchasing a product or a service. It can also be an NFC enabled payment, for example, Apple Pay, Google Pay, and Samsung Pay; Each of these solutions allow transactions to be made directly from a phone that is linked either to a card or account.
It is time to say goodbye to ‘dirty’ cash and hello to ‘clean’ contactless payments in the GCC.