Adoption of a broader range of digital payment methods is accelerating in the UAE and the technology fuelling the future of payments, according to Mastercard’s New Payments Index 2022.
In addition to being aware of solutions like cryptocurrency, digital cards, biometric payments, BNPL (Buy Now Pay Later) and open banking, consumers in the UAE are increasingly and actively using these solutions in their everyday lives.
Mastercard’s New Payments Index 2022 found that 88 per cent of people in the UAE have used at least one emerging payment method in the last year. Of these, 39 per cent used a tappable smartphone mobile wallet, 29 per cent used BNPL, 20 per cent used cryptocurrency and 18 per cent used a payment-enabled wearable tech device.
Consumers are also making purchases in increasingly diverse ways, including through voice assistants and social media apps.
Increased usage of digital payments
While traditional payment methods still have traction, 29 per cent of consumers in the UAE indicated they used less cash in the past year. By contrast, 66 per cent of UAE users (compared to 61 per cent 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.
The Index confirmed security is top of mind when deciding what payment methods to use, globally and in the UAE (36 per cent). In the country, security and rewards are the main considerations, followed by promotions and ease of use.
Highlighting sustainability as a key driver in the region, 36 per cent 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.
High awareness of Buy Now, Pay Later
The majority of UAE consumers have heard of BNPL with 87 per cent saying they are familiar with the concept, and almost half (46 per cent) 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, the report added.
Those that have used BNPL find it useful for emergency and big-ticket purchases, as well as increased purchasing power. Consumers also find BNPL useful for unique use cases, including as a budgeting and financial planning tool.
Account-to-Account (A2A) payments
The report further explained that a majority of consumers are seeking greater agility to optimise bill payments, prioritising control, flexibility, convenience, and integrated payment technologies.
Most consumers are open to direct account-to-account payment options, by linking their account to a merchant site for future purchases. 83 per cent of UAE consumers using account-to-account payments have maintained or increased their usage in the last year.
Seven in ten consumers (70 per cent) agree they are interested in a bill payment option that allows them to change the date they pay their monthly bills, mostly due to an irregular income. Bill payment options that allow them to pay over a period using a buy now, pay later solution (71 per cent) was also of interest, as well as automatic payments for their household bills (70 per cent).
Consumers are relying on digital finance options for their everyday financial tasks, with the benefits of open banking like speed, convenience, and transparency. Eight in ten (81 per cent) know about open banking and are using it to pay their bills, do their banking, secure or refinance loans, and make BNPL payments, the report pointed out.
Over half (55 per cent) of UAE consumers feel safe using apps to send money to people or businesses from their phones. Five in ten (50 per cent) are willing to share financial data information with apps to have access to payment tools that help them manage their money.
Biometrics offer convenience and security
Consumers recognise the convenience that biometrics can offer, with 71 per cent agreeing it is easier to make payments using biometrics than a card or device. The potential for security optimisation is also evident to consumers, with seven in ten agreeing biometrics tech for payments is more secure than two-factor authentication.
While consumers do have some concerns about what entities have access to their biometric data, they are still open to using it given the time it saves, and nearly two-thirds (62 per cent) have used biometrics for at least one purchase in the last year.
Five in six (87 per cent) consumers have used or plan to use their fingerprint to make a payment, which was followed by other biometric methods like facial recognition, palm or hand, retina scans, and voice recognition.