Cash ceding ground to digital wallets in the United Arab Emirates in 2023

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Globally, the usage of physical money is decreasing at a rapid rate, with other payment methods such as digital wallets and buy now pay later schemes gaining increasing traction among consumers. The trend is no different in the United Arab Emirates, where digital wallets have grown into significant prominence over the last few years. The global pandemic has accelerated the trend, and now a significant proportion of consumers are using the payment solution to complete their purchases online.

The growing shift towards digital wallets is expected to further continue over the next five years in the Emirati nation. As a result, more and more businesses across industry verticals are seeking to provide digital wallet payment solutions to their consumers. To provide businesses with the capability to offer their consumers a digital wallet, financial services providers are forging strategic alliances.

• Al Maryah Community Bank (Mbank) and Dgpays Group, in April 2023, entered into a strategic alliance to offer digital wallets in the Emirates. As part of the collaboration, the two firms are utilizing their expertise to help business owners, freelancers, and entrepreneurs to integrate digital wallets into their business operations.

Following the launch of the digital wallet service, Emarat announced that the firm collaborated with Mbank to launch the solution across 120 fuel retail locations in the Emirates. Soon, customers will be able to use the Mbank wallet to make seamless and contactless payment transactions at Emarat fuel stations. Furthermore, customers will also be able to earn MPoints, which can be later used for redeeming rewards. Going forward, PayNXT360 expects more such retailers to partner with Mbank to launch the mobile wallet service, as the demand for digital wallets continues to grow in the UAE.

Other firms are also entering into strategic partnerships to serve the growing demand for digital payments. This includes the alliance between Mashreq and i2c in March 2023. As part of the collaboration, the two firms will offer digital payment solutions in the Emirati market. Mashreq is expected to leverage i2c's software-as-a-service payment and banking solution to launch new digital payment solutions catering to the needs of customers, merchants, and fintech firms.

• In 2022, Majid Al Futtaim also launched a digital wallet in the Middle East and North Africa region. The payment solution was launched in partnership with Visa, i2c, and Network International. The digital wallet, SHAREPay, will enable SHARE members to link up to 10 debit and credit cards. In addition to seamless payment, the transactions through SHAREPay will also enable members to earn more reward points.
• Careem Pay, the financial services arm of the ride-sharing app Careem, also launched a digital wallet in the UAE in 2022. The product was launched in partnership with First Abu Dhabi Bank and payment solution partner Magnati. Initially, the payment solution was made available to its users in the UAE only. However, the firm revealed that it has plans to roll out the service in more Middle Eastern countries.

With more and more firms launching digital wallet solutions in the United Arab Emirates, the competitive landscape is poised to grow at an accelerated pace. As a result, existing digital wallet providers are also seeking to expand their portfolio of digital payment solutions in the Emirates.

• Payit, for instance, launched a Letsgo Payit Visa Platinum Card in March 2023. The launch is part of the firm’s strategy to expand its cashless transaction volume while offering consumers a more enhanced digital wallet solution. As the digital card is powered by Visa, Payit users can transact using their digital wallet at more than 80 million merchants, including online and offline stores, worldwide. Visa and Payit have made the card available in both physical as well as virtual formats.
• In March 2023, Astra Tech, the Dubai-based fintech firm, also launched a similar offering in partnership with Mastercard. As part of its collaboration with Mastercard, Astra Tech will issue digital and physical cards to millions of users across the Middle East. This will enable Astra Tech to further expand its payment ecosystem while aiding the growth of the digital payments sector in the Emirati nation.
• Mastercard, in March 2023, also partnered with e& money to transform the digital payments sector in the UAE. The financial arm of e& launched virtual and physical cards, empowering consumers with robust digital payment solutions.

The launch of all these solutions indicates that the demand for digital wallets and prepaid cards remains robust among consumers in the region. Going forward, PayNXT360 expects more such strategic collaborations in the Emirati nation, as players seek to diversify their product offerings and boost customer stickability. The launch of all these products, including digital wallets and prepaid cards, will keep aiding the growth of the prepaid card market in the United Arab Emirates over the next three to four years.

To know more and gain a deeper understanding of the prepaid card market in the UAE, click here.