Cash is still the reigning king, but that is likely to change rapidly given the UAE's thrust towards cultivating smart economies, says Xpress Money's Associate Vice President Strategy, Digital & BIA, Arundhoti Banerjee.
Xpress Money one of the world's most dependable money transfer brands believes that cashless transactions will become far more common in the #UAE by 2020 - despite accounting for only 10% of all payments regionwide at present.
Cashless transactions offer several benefits. For one, they leave a digital trail that is very effective in combating money laundering. Going cashless reduces counterfeiting risks, and also reduces the overheads of replacing damaged currency. For consumers, cashless transactions deliver convenience and the ability to manage payments more effectively.
Xpress Money notes the converging trends that are slowly shaping a cashless future.
First, the shift is to a cashless economy being driven by the #UAE government's thrust towards creating smart knowledge economies. In Dubai, for example the provision of smart government services is creating demand for cashless services, with the Dubai Plan 2021 a guiding blueprint. Nationwide, the #UAE Vision 2021's call for a 'Competitive Knowledge #Economy will also drive innovation in cashless transactions.
'The rise of smart cities is correlated with cashless transactions. There are two trends shaping this the ability to pay online and via mobile for government services and utilities, and an increasing desire by consumers to have integrated payments handled by one device be it a mobile phone, or a debit card. We have seen established technology players, government departments, a few financial institutions and fintech startups all make moves towards enabling this. As a next step, we envision these initiatives integrating and gaining critical mass as more and more transactions become cashless, said Xpress Money's Associate Vice President Strategy, Digital & BIA, Arundhoti Banerjee.
Second, popular smartphone brands are bringing cashless Near Field Communication technologies in the UAE, with brands like Samsung already enabling its SamsunPay technology at Points of Sale in the UAE, and Apple making moves to launch its own Apple Pay service later in the year.
Third, the rise of interest in blockchain ledgers and cryptocurrencies has spurred discussion on their potential within the country's financial ecosystem.
Fourth, the #UAE is also paving the way in regulatory developments to enable cashless payments. It is set to launch a fully integrated digital payment platform supported by the entire banking sector, first announced by the #UAE Banks Federation in 2014.
Earlier this year, the #UAE Central Bank released a new framework governing digital payments in the UAE, taking into account the roles Merchant Account Providers, Third Party Payment Gateways, Integrated Payment Providers and those who trade in cryptocurrency. The framework also defines licensing regimes for payment service providers in retail, micropayments, governments and non-deposit taking firms.
Fifth, the #UAE government is actively supporting cashless payment methods for accessing public sector services. Utilities and telecom providers are following suit. For instance, Sharjah and Abu Dhabi are experimenting with ways of enabling payments through the Emirates ID cards that all #UAE nationals and expatriates must carry.
And finally, cashless transactions have also been made accessible to the country's large transient and unbanked blue-collar audiences, with the #UAE Ministry of Labour's Wages Protection System (WPS) having enabled salary deposits onto prepaid cards.
'The #UAE is known for its rapid pace of change, and for accomplishing the impossible. Right now, the vast majority of transactions might be cash-based, but the landscape in 2020 will be very different. We're seeing a confluence of forces setting the scene for the rapid uptake of cashless transactions, which have the potential to reduce overheads, help anti money laundering efforts and bring convenience to consumers, Banerjee added.
Norway, #Sweden and #Denmark are examples of countries that are transitioning to a practically cashless society. In Sweden, cash transactions accounted for only 2% of the value of all payments made in 2015 with that figure expected to plummet to 0.5% by 2020.