E-commerce transactions to account for 28.2% of all UAE card payments in 2020

The UAE had the biggest annual spend per online shopper in the region at $1,648

Young woman is paying in the cafe using her mobile phone. Getty Images

E-commerce transactions will account for 28.2 per cent of total card payments in the UAE this year as Covid-19 changes shopping habits, a joint study by Dubai Economy and payments giant Visa showed.

According to The UAE eCommerce Landscape 2020 report, the latest forecast is higher than the 21.9 per cent share the e-commerce sector was predicted to have prior to the pandemic.

"Cashless payments and e-commerce are definitely on a faster trajectory than anticipated, and we look to translate this unprecedented growth into an opportunity for businesses of any size to establish and enhance their presence online," said Sami Al Qamzi, director general of Dubai Economy.

The UAE also had the biggest annual spend per online shopper at $1,648 in the wider Middle East, North Africa and South Asia region. The UAE, which was compared to markets including the US, UK, Australia, Singapore, Brazil, South Africa and Malaysia in the study, maintained a healthy average transaction size in online spending.

The average transaction value in the UAE was $122 between 2019 and 2020, compared to $76 in mature markets and $22 in emerging markets, the report showed.

The coronavirus pandemic has spurred the growth of e-commerce and digital payments in the Middle East and North Africa as more consumers now opt to shop online. Nearly 49 per cent of UAE consumers have been shopping online more because of the pandemic, with 61 per cent now using cards to transact online, a survey by Visa, Dubai Police and Dubai Economy in June showed.

Nearly 35 per cent of all transactions were made using credit cards but the share of debit card transactions has also been growing between 2018 and 2020, the report said.

A developed logistics infrastructure, greater financial inclusion and support for digital payments, increased adoption of e-commerce platforms by retailers and government policies that support innovation have helped the e-commerce sector's growth in the UAE, Dubai Economy said.

"We’ve seen a number of adoption barriers reduce as the demand for e-commerce and contactless commerce skyrocketed," said Marcello Baricordi, Visa’s general manager for Middle East and North Africa.

"We call these habit forming behaviours as more consumers and merchants have now experienced the security, convenience and range of online commerce and we anticipate this trend to continue post-pandemic."

UAE's online retail sales alone are expected to cross $1.5 billion in the fourth quarter of this year, a separate survey by Red Seer Consulting revealed. The growth is largely driven by online grocery sales, which is expected to grow more than 260 per cent annually in the fourth quarter to reach $300 million.

The consultancy expects 85,000 e-grocery orders per day in the three months to December, compared to 20,000 orders in the fourth quarter of last year.

Digital payments are also booming as e-commerce uptake picks up pace in the country.

About 43 per cent of consumers in the UAE will continue using contactless payments more in stores and 48 per cent will increase their use of online payments with cards or digital wallets for future e-commerce purchases, the Visa, Dubai Police and Dubai Economy survey found.