Apple Pay to boost UAE's e-payments market even as cash remains king

Banks and regulators primed for innovation but region faces ingrained barriers in moving away from a cash-based economy

DUBAI, UNITED ARAB EMIRATES. 24 October 2017. Apple Pay launched in the UAE. Used to pay for take away at Cafe Nero in Dubai Mall. (Photo: Antonie Robertson/The National) Journalist: Caline Malek. Section: National.
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The UAE launch of mobile wallet Apple Pay has been welcomed as a much-needed next step to jump-start the Arabian Gulf's e-payments industry, even as experts warn the service could face barriers in a society where cash remains king.

Banking experts said the success of Apple Pay depends on impeccable customer service and the roll-out of reward schemes and other incentives.

“Using cash is not so cumbersome that customers will automatically look for a direct substitute,” said Charles ­Habak, vice president and head of banking and fintech at consultancy Booz Allen Hamilton.

"Any new option, therefore, has to bring additional value-adds – such as reward points, loyalty programmes and a killer user experience. Apple Pay is not going to revolutionise the payments industry, but it will provide a nice, complementary option for customers."

The Middle East is among the world's most cash favouring economy due to lack of trust in the security of online transactions among customers.

"Cash still holds a large sway in the region, over 80 per cent of all transactions, especially with personal payments or payments with smaller merchants," said Suvo Sarkar, senior executive vice president at Emirates NBD.

However, that is changing. Online payment gateway Payfort this month reported that in the Middle East and North Africa there was an overall 22 per cent increase in online transactions last year, led by growth in Saudi Arabia (27 per cent), Egypt (22 per cent) and the UAE (21 per cent).


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Launching Apple Pay in the UAE Tuesday, the US-based technology firm claimed the new digital platform "transforms mobile payments with an easy, secure and private way to pay".

Six UAE banks – Emirates NBD, Mashreq, RAKBank, Emirates Islamic, HSBC and Standard Chartered – have already committed to the service, supported by Visa and MasterCard. Telecoms provider du is also on board along with retailers including Sharaf DG, Home Centre and Etihad Airways.

Rajeev Patel, director of transaction services at Deloitte, said the launch of Apple Pay was “greatly needed in a region that has been craving product innovation in banking”.  

In April, Samsung launched its own digital wallet, Samsung Pay, in the UAE, while banks including Emirates NBD and Mashreq have implemented their own contactless and e-payments services.

But there remains plenty of “white space”, said Mr Patel.

Apple's launch is also likely to boost the UAE's profile as an emerging fintech hub. "We are seeing more international blue chips like Apple and Samsung partnering with UAE banks, which should encourage more technology-related investment here," he said.

Pankaj Kundra, head of payments at Mashreq, said that with high per capita income, high smartphone penetration rates and a digital-ready payments infrastructure, the UAE was a "good place to launch
Apple Pay" .

However, he added: “Displacing a cash-based economy will always be a challenge. Apple, with its stakeholders, will have to devise additional benefits to encourage take-up.”

Removing cash from the economy is viewed as a key goal for emerging markets as the cash-carrying process is costly and time-consuming, and digital payments can be safer and more transparent.

A spokesperson for Emirates Digital Wallet, which recently launched a mobile payments service for the estimated half a million UAE workers whose incomes are too low to have a bank account, said Apple Pay’s impact would be limited because “it only caters to a min­ority of the market”.