Almost seven out of 10 payment transactions in the Middle East will be non-cash in 2023, as the region catches up with the global trend towards a cashless economy.
SHIFT, a new report by the MENA Fintech Association, said the region has historically been inclined to cling to cash payments, and the banking sector has been slower to modernise.
However, digital payments are becoming more commonplace and will be more common than cash in 2023, with 69 percent of all transactions to be cashless in 2023, the report said.
In the UAE, non-cash transactions are growing faster, and will account for 73 percent of payments in 2023, up from 39 percent in 2018 and showing a compound annual growth rate (CAGR) of 25 percent in five years, compared with a regional CAGR of 20 percent.
SHIFT data showed that in the UAE, business to business (B2B) transactions account for the highest volume of cashless transactions, followed by business to consumer (B2C), with business to government (B2G) accounting for the lowest percentage of cashless transactions.
The report cited noted that efforts by regional governments to shift towards cashless transactions, such as Saudi Arabia’s Vision 2030 strategy that seeks to make 70 percent of the country’s transactions non-cash by 2030, as well as the surge in e-commerce, are behind the rise in digital payments.
The UAE’s e-commerce turnover has grown from $5 billion in 2015 to reach $19.8 billion in 2020 and is forecast to hit $27.1 billion in 2022, according to a Fitch forecast.