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From 2015 to 2020, national payment revenues increased by 17 per cent $8.4 billion. Image Credit: Gulf News archives

Dubai: As purchasing habits shifted almost overnight from offline to online and cash to noncash following COVID-19, the payments industry subsequently suffered an impact far less severe than initially anticipated, according to a new report by Boston Consulting Group (BCG).

According to report, the UAE shares many commonalities with other regional and international geographies, including manageable revenue losses considering recent turbulence and optimistic projections for the future.

From 2015 to 2020, national payment revenues increased by 17 per cent $8.4 billion, and they could reach $14 billion by 2030. The UAE has the potential to record sustained growth over the next five years and beyond, with a compound annual growth rate of 5.3 per cent from 2020 to 2030.

“Our comprehensive analysis leads to a sure conclusion that the payments industry of the UAE has played its part in the country’s economic recovery,” said Mohammad Khan, Partner, BCG.

“New consumer preferences and the emergence of digital channels have collectively helped to accelerate e-commerce enablement, broadening fulfillment options and streamlining point-of-sale and online checkout in the process. Such trends have laid the foundations for a new chapter of payments industry vibrancy and success for all concerned in the years ahead, something which is emphasized through notable growth projections.”

Having taken payment instruments including charge card, cheque, high-value credit, electronic credit transfer, current account, and credit, debit, and prepaid cards into consideration, the report has revealed payments revenue and total transaction projections for the UAE payments industry.

Innovation drives growth

The forecast of $14 billion overall worth of revenue payments by 2030 represents an increase of 67 per cent from 2020, while the number of transactions is expected to rise from approximately 644 million to over 1.2 billion during the same timeframe – an increase of 94 per cent.

“Innovation in the UAE’s payments industry will continue to gain traction over the decade, which will, in turn, lead to record numbers of digital transactions being registered continuously,” explained Markus Massi, Managing Director and Senior Partner, BCG.

“This scenario will transpire through efforts by industry incumbents to improve services capabilities, with the introduction of new market players driving competition and innovation levels even higher. Services will become integrated with more digital ecosystems and thus present consumers with more seamless options, with the retail segment set to capitalize as a result.”

Over the coming years, the retail revenue of payments in the UAE is projected to witness sizeable increases. In 2020, the retail revenue of payments amounted to $4.7 billion. However, this figure is expected to rise to approximately $7.9 billion by 2030 – an increase of 68 per cen - with the number of related transactions also rising by almost 93 per cent from 567 million in 2020 to over a billion by 2030.