In 2022, the UAE’s cards and payments market was estimated to be worth $119.8 billion.
In five years, the UAE’s payments industry is expected to see a 55% increase in overall revenue. It will reach $19.8 billion, due to the growth of digital transactions and GenAI-powered technical breakthroughs.
In a research note, analysts from Boston Consulting Group highlight an exceptional chance for payment providers based in the UAE. They emphasize the opportunity to redefine their roles and services as the global payments ecosystem undergoes evolution. This unique situation allows these providers to reassess and reshape their functions and offerings.
BCG’s comprehensive study of the UAE payments market predicts that the overall revenue growth will achieve a compound annual growth rate (CAGR) of 3.6% over the following five years (2023–2027). It will elevate the revenue pool to $19.8 billion. In contrast, the study foresees a compound annual growth rate (CAGR) of 6.2% for the $2.2 trillion increase in global payment revenues by 2027.
Statistics on UAE cards
GlobalData estimated the UAE cards and payments market to be worth $119.8 billion in 2022 and predicts it will experience a compound annual growth rate (CAGR) of over 8.0 percent from 2022 to 2026. Cash dominated the payment scene in the United Arab Emirates in 2022, accounting for almost 64% of all payment transactions.
Mohammad Khan, managing director and partner at BCG, suggests a turning point for those in merchant services, issuers, transaction banks, and payment infrastructure within the UAE. Although global growth is slower, data suggests that the UAE’s payments income pool is set to increase in the upcoming years. This increase is due to the UAE’s early adoption of GenAI-powered technological advancements integrated into organizational processes. Khan anticipates these advancements to offer specialized solutions and improved customer experiences, ultimately enhancing service quality and increasing profit margins.
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“The UAE payments industry has proven resilient in the face of global difficulties like the pandemic and economic uncertainties. According to the analysis, the UAE payments industry’s overall revenue increased at a compound annual growth rate (CAGR) of 9.7% between 2018 and 2022. It culminated in a revenue pool of $12.8 billion at the end of that year. In contrast, according to the “Global Payments Report 2023,” the global payments sector grew at an annual pace of 8.3%, reaching $1.6 trillion by the end of 2022.
Shift from cash to non-cash transactions
The shift from cash to non-cash transactions is one of the elements contributing to the previous progress in the UAE payments sector, according to BCG researchers.
Between 2023 and 2027, experts anticipate a Compound Annual Growth Rate (CAGR) of 10.9% for the UAE’s transactions. The nation’s transition from cash to digital transactions is driving this rise. Technological developments in payment systems and encouraging government programs are important motivators. The research emphasized the UAE’s economic boom as a significant factor in the ongoing growth. It also pointed out the shift in consumer preferences towards digital payments. These elements are actively supporting and contributing to the continuous expansion.
The UAE payments industry faces numerous challenges, including technological advancements and new market players. These disruptions involve the rapid rise of real-time payments, new value-added services, and the standardization of basic payment processing. Globally, over 5,000 fintech companies contribute significantly to the industry’s revenue, prompting UAE-based firms to strategize effectively to stay competitive.
The report identifies four key areas influencing the UAE’s payments industry strategy:
operational resilience, Generative AI, risk management and compliance, and mergers and acquisitions.
Fintech sector
According to the report, the investment trends in the UAE’s fintech sector align with global patterns. The focus has shifted from large-scale deals to acquisitions centered around capabilities. This shift urges companies to reevaluate their partnership strategies, enabling them to seize current M&A opportunities for sustainable growth.
Lukasz Rey, BCG’s managing director and partner overseeing the Middle East Financial Institutions Practice, emphasized the growing importance of Generative AI in the payments sector. Its integration into core organizational processes enhances compliance measures. Rey also highlighted the value of strategic partnerships and M&A in bolstering capabilities in this field.
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