Majority of UAE consumers used a new digital payment method last year

About 88 per cent of consumers in the UAE have used at least one emerging payment method in the past year as the move towards a digital economy accelerates, according to a new survey.

Thirty-nine per cent of UAE residents used a tappable smartphone mobile wallet, 29 per cent used buy-now-pay-later (BNPL) services, 20 per cent used cryptocurrency and 18 per cent used a payment-enabled wearable tech device, MasterCard’s New Payments Index 2022 found.

Consumers are also making purchases using voice assistants and social media apps, said the survey, which polled 1,000 adults in the UAE and 35,040 individuals globally.

“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,” said JK Khalil, cluster general manager for Mena East at MasterCard.

Globally, the pandemic spurred the faster adoption of digital payments, particularly contactless payments, because of heightened awareness about the spread of the virus through banknotes and plastic money.

More than half of UAE consumers now use digital wallets, according to a June survey by payments solutions provider Checkout.com. About 48 per cent of respondents to the survey said that digital wallets could lead to a cashless society in a decade.

While traditional payment methods continue to be used in the UAE, 29 per cent of respondents to the MasterCard survey said they used less cash over the past year.

In contrast, 66 per cent of UAE consumers increased their use of at least one digital payment method in the past 12 months, including digital cards, SMS payments, money transfer apps and instant payment services, according to MasterCard.

About 36 per cent of UAE consumers said security is the top priority when deciding which payment methods to use, followed by rewards, promotions and ease of use. Thirty-six per cent of respondents said they also consider social and environmental benefits when choosing a payment method.

Generation Z is least likely to use cash or make in-person purchases and payments in the UAE, the survey found.

About 64 per cent of Gen Z in the Emirates are likely to have obtained a new digital payment alternative, compared with 22 per cent of baby boomers.

While security and data privacy remain a concern for Gen Z, they are more likely than older customers to perceive digital tools as secure, the findings showed.

Although cryptocurrency use was low, 40 per cent of digital token users in the Emirates said they have used it more in the past year, MasterCard said.

About 74 per cent of UAE consumers said they would use cryptocurrencies more if they better understood digital tokens. This is despite 95 per cent of respondents admitting to having mainstream awareness of cryptocurrency and 86 per cent knowing about non-fungible tokens (NFTs).

Sixty-six per cent of consumers in the UAE believe that NFTs and other digital assets could be good investments, while 67 per cent have undertaken at least one crypto-related activity in the past year, such as opening a wallet, buying, trading or holding the token as an investment, the MasterCard survey found.

Meanwhile, 87 per cent of UAE respondents said they are familiar with the BNPL concept and 46 per cent are comfortable using it.

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 survey found.

“Those who have used BNPL found it useful for emergency and big-ticket purchases, as well as increased purchasing power,” it said.

“Consumers also find BNPL useful for unique use cases, including as a budgeting and financial planning tool.”

Fifty-five per cent of UAE consumers said they feel safe using apps to send money to people or businesses from their phone, the survey said.

Half of all people surveyed are also willing to share financial information with apps to have access to payment tools that help them manage their money.

Seventy-one per cent of UAE consumers said it is easier to make payments using biometrics than a card or device, with 70 per cent of those polled saying it is more secure than two-factor authentication, the MasterCard survey said.

While 62 per cent of people in the UAE used biometrics for at least one purchase in the past year, 87 per cent said they used or plan to use their fingerprint to make a payment, followed by other biometric methods such as facial recognition, retina scans and voice recognition.

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