Careem enters FinTech sector with a digital wallet and peer-to-peer transfers

Ride-hailing company Careem has expanded its presence in the UAE's FinTech sector, rolling out a digital wallet for its Careem Pay service that stores real money for customers as part of its plans to become a digital financial services provider.

It also introduced a peer-to-peer (P2P) transfer service that enables users to send, request and receive money by using either a phone number, QR code or personal payment link.

Uber-owned Careem partnered with First Abu Dhabi Bank (FAB), the UAE's largest lender by assets, and payments solution provider Magnati to roll out Careem Pay and the P2P transfer facility, which are authorised by the Central Bank of the UAE, the company said on Thursday.

“In our bid to simplify the region’s payment experience, we have made the Careem Pay digital wallet open loop and publicly available to everyone in the UAE,” Mudassir Sheikha, chief executive and co-founder of Careem, said.

“Careem Pay’s focus on customer experience, combined with FAB and Magnati’s strong compliance and regulatory position, will bring a powerful offering to the market.”

The increased use of contactless mobile payments was accelerated by hygiene concerns about using cash during the Covid-19 pandemic.

Consumer spending through digital wallets will reach more than $10 trillion in 2025 — up from $5.5tn in 2020, according to a 2021 report by UK-based Juniper Research.

A digital wallet stores users’ credit and/or debit card information and links it to a payment gateway to allow purchases at a point of sale. Similar to credit cards, digital wallets only work at merchants that accept them as a payment method.

Google was the first major company to launch a mobile wallet in 2011. Today, consumers have a number of digital wallets to choose from, including Samsung Pay, PayPal and Apple Pay.

Careem, which became the Middle East's first unicorn — a start-up with a valuation above $1 billion — when US-based Uber bought it in 2019 for $3.1bn, has implemented a digital “know-your-customer” process to meet regulatory compliance and verify the customer’s identity, it said.

“There is a lot of friction in the online payment experience today,” Madiha Sattar, vice president of Careem Pay, said.

“Dealing with cash is a hassle, you need to add your receiver’s IBAN, wait to register a beneficiary, the receiver may not be notified in real time, and the sender and receiver are unlikely to be using the same app already.”

One in three people in the UAE are registered on the Careem ride-hailing app, which offers 18 services in Dubai and features third-party services, Ms Satter said.

This means that there is a higher probability of the sender and receiver using the same app to transfer money, she added.

The digital wallet can be used to pay for goods and services already offered on the Careem app — such as ride hailing, food and grocery delivery, bike sharing, intercity travel, cleaning, PCR testing and car rentals — and users will soon be able to use it with merchants beyond the app, the company said.

Money from the Careem Pay digital wallet can be withdrawn from any UAE bank account.

“We plan to issue physical and virtual cards linked to the wallet that can be used at ATMs and at merchants,” Ms Sattar said.

Careem Pay also plans to introduce international remittance solutions for customers and its drivers, known as captains, as well as other financial services in lending, savings and insurance, among others, she said.

“Payment options for small and medium enterprises are still limited as digital solutions from traditional players are not optimal,” Ms Sattar said.

Meanwhile, Careem customers will also be able to send, request or receive money by sharing a phone number, personal QR code or personal payment link through its P2P service.

The P2P service is available to all customers in the UAE and will be introduced in other countries soon, the company said.

Careem is well-positioned to become a major digital financial services platform in Mena because of the company’s massive scale, Mr Shaikha said.

“We have 50 million customers signed up, four million cards on file, more than two million captains and more than 22,000 merchants in our ecosystem,” he added.

“We have deep payments capability, having processed $4.6 billion worth of transactions over the past five years, are authorised by the UAE and Pakistan central banks and are a known and trusted brand.”