Fintech Payments UAE

Fintech needs to reach down the value chain (Anouar Bourakkadi Idrissi, Gulf News)

Vast segments of UAE’s transaction space still dominated by cash purely because of ease.

The continuous change in the payment industry has gone into overdrive and will only move faster. From digital disruption to the race to innovate, it is becoming more important for organisations to change and adapt in a market that never ceases.

With 51 per cent of the global population online, and more than 8 billion mobile phone subscriptions, the shift to digital services is becoming increasingly important. The 2019 UAE digital media statistics reports 8.75 million active mobile internet users. Across the region, 99 per cent of the population is termed as internet users.

Because of this rapid shift, more consumers are looking at mobile banking as their main option. With more than 60 per cent of the working population in the UAE sitting outside of the financial system — especially in manufacturing, trading, F&B and construction — it is important to cater to this market as well.

The Expo 2020 and government-led infrastructure projects are some of the key factors driving the growth of the UAE’s construction market, and this trend is only expected to continue. Some of the key trends businesses across the UAE will continue to see include:

Trend 1: The move towards a digital society Innovations in consumer technology and the rise of fintech are not only driving growth in electronic payments, but changing the face of the financial services sector resulting in innovation, efficiency and greater financial inclusion.

The move to the digital society is encouraging banks and merchants to adopt secure digital payment solutions that could improve their bottom-line. Omni commerce, for instance, emerges with the expectation to pay seamlessly no matter the method of payment chosen by the consumer — whether in-store, online or via a mobile device.

With the facilitation of contactless payments and the launch of various mobile payment services, including Samsung Pay, Apple Pay and Google Pay, it is evident the country is riding the next wave of the fintech revolution.

In 2020, the industry is moving towards a more consumer-centric direction, focusing on easier and more convenient payments. Beyond digital payments, customer attitude towards banking services overall is evolving. Customers are now asking why operations that are in demand can’t be done on mobiles, rather than going to a branch.

This has resulted in new players filling the gap. The UAE is home to one-third of fintech start-ups in the region.

Cash carrying nation:

However, and despite the entry into fintech, cash remains the preferred method of payment, accounting for 82 per cent of the total transaction volumes in 2018. The UAE is still considered as a cash country, even though cards have become a commodity.

There are still sectors within the economy — and large groups of individuals — that remain heavy users of cash and are deeply dependent on it. A few examples of people preferring cash include low-income workers, charity workers, cab drivers, those who don’t have bank accounts or credit cards, but also some businesses such as small retailers and restaurants that can’t justify high credit processing fees on small purchases.

According to Edenred’s 2019 data insights, more than 65 per cent of the UAE users in manufacturing/trade and construction industries continue to withdraw on average 80 per cent of their salaries using their salary cards. This highlights the need for further education on the potential of digital payments and the benefits associated with them.

This trend highlights the need for more education to raise awareness of the benefits that can be realised with the adoption of new technology.

Trend 2: Offering the right financial tools to employees Employee retention continues to top the list as one of the main priorities. One of the key opportunities is to improve engagement among employees by adding monetary incentives and benefits to regular pay packages.

It is becoming important for organisations to make employees lives easier and increase their purchasing power in a number of areas, including meals, transportation, health care, training, environmentally friendly products or human services.

Low-income workers in the UAE do not have access to loans or salary advances and currently access their money via the payroll cards issued through the Wages Protection System (WPS). These systems were introduced in 2009 by the government to protect workers’ salary.

Under this system, employees receive salary cards, which employers then pay the wages onto.

However, and with the introduction of electronic banking solutions offered by select organisations, employers can conveniently process wages through corporate tools and equip their employees with much better solutions beyond a salary card.

A mobile application linked to their card gives them the opportunity to manage finances, send money home securely and swiftly, receive salary advances and even engage in savings. It is a great way companies can financially empower their workers, and considerably sharpen their competitive edge.

As the adoption and maturity of digital payments continues to grow, the benefit of these new solutions will start to be visible thanks to the actively growing fintech start-up and SMEs ecosystem.

Trend 3: The impact of technology on salary payments

In addition to managing staff salaries, organisations are keen to adopt an integrated, user-friendly mature HR solutions to help automate all manual processes.

With cloud-based HRMS, payroll, and talent management services, organisations are quick to adopt a one-stop HR solution that includes leave management, recruitment, performance, payroll and insurance.

Payment solutions have evolved to include more business-critical complex tools that can incorporate employee benefits and much more.

Modern technology has enabled organisations to effectively manage time, wages, leave, performance and draw actionable insights from them. This has led to an increase in productivity and efficiency, allowing HR departments to focus on value-adding and business-critical tasks.

Additionally, such solutions help organisations accessing detailed insights proven useful for forecasting, budgeting. auditing and analysis purposes. With a number of data visualisation tools, finance departments can better manage their working capital and set them up for future success.

The UAE government has created unique tools for residents and citizens to manage their paperwork, pay their bills, renew licenses and rent contracts. To keep up with this pace, service providers need to satisfy this level of expectation from businesses and consumers when launching any new services or features.

Anouar Bourakkadi Idrissi is Chief Operating Officer at Edenred UAE.

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