What a cashless society could look like

Service providers are introducing biometric and QR codes to ease payment process quicker

The Covid-19 pandemic is encouraging businesses to deploy technologies that will boost the digital payments business from $4.4 trillion this year to $8.26 trillion in 2024, according to Statista. VictShow more

The Covid-19 pandemic has spurred the rapid adoption of digital payments worldwide to meet soaring demand for contactless transactions, and the UAE is adapting to the "tectonic shift" faster than experts expected.

Technologies such as biometric identification and Quick Response (QR) codes are evolving as the next modes of payment, according to retail, technology and credit card companies.

"The introduction of biometrics, especially facial recognition, may emerge as a popular payment mechanism," Arjun Vir Singh, executive vice president of cards and payments at Dubai conglomerate Al-Futtaim Group, tells The National.

“You become the form-factor, you no longer need to even take out your phone,” he said.

This week, Amazon made that future a reality, as it introduced a payment-enabling palm scanner. The product, which links the characteristics of a person's palm to their Amazon account, will be tested at two of the company's physical stores in Seattle.

Using biometric data for commercial purposes goes all the way back to 1839, when a deed of sale on a house in China was signed with a fingerprint, according to Dr Anil K Jain, a board member of Mohamed Bin Zayed University of Artificial Intelligence.

Back then, it addressed issues of illiteracy. Today, the use of biometric data to initiate payments by mobile phone are expected to secure $2.5 trillion by 2024 from the $228 million forecast for 2019, according to UK-based Juniper Research.

About 90 per cent of smartphones will have some form of dedicated biometric hardware in the next four years, enabling payment by phone, facial recognition or a thumbprint scan, according to Juniper.

As the global economy emerges from what has been touted as the deepest recession since the Great Depression, analysts predict the uptake of digital payments will accelerate with the economic rebound.

In the UAE, consumers are anticipating a shift. Two-thirds of people expect the country to become fully cashless by 2030, according to a new poll by Standard Chartered.

"The checkout experience has changed for good and we expect this trend to stay," Khalid Elgibali, Mastercard's division president for Middle East and North Africa, told The National.

“While previously driven by convenience, the concerns around public health and hygiene have accelerated this [transition] exponentially.”

Abu Dhabi-based PayBy, which launched mobile payment services in March, is offering a peer-to-peer transfer feature that scans a user’s QR code and conducts cashless transactions without sharing private data.

A QR Code is a square barcode that contains machine-scannable data that can be read by smartphones. The information stored in the code can be used to make a call, make payments, open a website and for many other applications.

"We expect digital payments to eventually overtake most cash usage as consumers favour convenience and a seamless checkout experience," Sebastian Reis, executive vice president of global e-commerce at Checkout.com, told The National.

Checkout.com offers connected payment solutions for many of the region’s leading brands including Careem, Deliveroo, Zomato and Hungerstation.

The road ahead needs to be marked by greater safety, security, speed and convenience, driven by industry players providing and supporting the digital payments infrastructure, experts said.

The pandemic was a “tectonic shift” in payments, said Akshay Chopra, head of innovation and design for Central Europe, Middle East and Africa, at Visa.

Three out of four UAE consumers will prefer a store where they don’t need to interact with a cashier and will gladly switch stores if it means contactless shopping, he added.

Visa is now imagining a world where customers can scan QR codes to add products to their shopping cart in-store and checkout without interacting with a sales person. It is testing the technology at its innovation centre in Dubai.

Amid a wider uptake, service providers said they are working to build the trust of consumers, which along with inclusion are top concerns for consumers and technology developers alike.

“Security by design is central to development of new payment technologies,” Mr Elgibali said.

More than 60 per cent of the UAE’s current working population, especially in manufacturing, trading, food and beverage and construction, sits outside the traditional banking system, according to Edenred data.

With the outbreak of Covid-19 "it is becoming critical for businesses to ensure financial inclusion," Anouar Bourakkadi Idrissi, chief executive at Edenred UAE, said.

Edenred launched a Mastercard-linked app in August to facilitate financial inclusion.

“Now even unbanked employees can become cardholders," he said.

The company serves more than two million employees with its payroll app.

In June, Dubai-based ride-hailing company Careem teamed up with Visa to offer its drivers real-time access to their daily trip earnings.

The company has experienced an uptick in digital transactions during the pandemic.

Currently 90 per cent of its UAE customers are using cashless option Careem Pay against the 75 per cent before the pandemic, said Hassan Mahbub, head of strategy at Careem Pay.

“Covid struck and we saw, like other e-commerce platforms, a shift to non-cash ... on the payments front, it gives us a very strong footprint and baseline,” he said.

The Careem Pay wallet is the most downloaded wallet in the region and one in three rides are paid for through it.

To facilitate the digital transactions, banks are also sprucing up their infrastructure.

As banks increase their digital capabilities in the evolving environment they need to ensure seamless functionality across platforms, said Colin Dallas, head of retail banking at the National Bank of Fujairah.

It is critical to have effective measures in place to protect passwords, biometrics, linking mobile devices and customer’s online account, he added.

To enhance its mobile banking capabilities, the National Bank of Fujairah enrolled in ‘Klip’ - the nationwide multi-bank initiative, launched by Emirates Digital Wallet, that provides instant and person-to-person payments in the UAE through a mobile app.

“Transactions needs to be a quick and simple process with a maximum of one tap," Mr Dallas said. A bank "needs to ensure that all merchants will accept these payment methods”.