UAE consumers keen to replace cash with phones

Published July 11th, 2013 - 05:25 GMT
Consumers worldwide made $12.84 billion (Dh47.1 billion) in mobile payments in 2012
Consumers worldwide made $12.84 billion (Dh47.1 billion) in mobile payments in 2012

Despite their deep-rooted attachment to paper bills and coins, a growing number of UAE consumers are now keen to use mobile phones instead of cash to make payments.

A street survey commissioned by Gemalto, a digital security company, showed that nearly nine out of ten residents in Dubai would like to use their handsets as a mobile wallet to pay for goods and services. Only a small proportion cited concerns over security as an obstacle to using handheld devices as a payment tool.

The survey findings dispel previous studies that claim the UAE market is not yet ready to embrace payment transactions using tools other than cards and cash due to security concerns.

Historically, the region has a strong attachment to paper money, with more than 75 per cent of transactions made in cash. A recent Rakbank survey showed that more than a third of residents in the UAE dont find mobile phones to be secure devices, because handsets can easily be compromised.

The payment landscape, however, is changing as the recently developed technology called near field communications (NFC) has now made it possible to pay for goods and services just by tapping a mobile phone on a machine.

Although the technology is already in place, the mobile wallet trend has yet to reach the mainstream because financial institutions and merchants need some time to install the necessary infrastructure and shift to the new payment tool. For instance, retailers need to be equipped with point of sale terminals to enable customers to use their mobile phone when making payments.

For NFC to go mainstream in the UAE, like anywhere else in the world, the main challenge is still the migration to a fully NFC infrastructure, which doesnt happen overnight but the good news is that the ecosystem is being put in place, Mohammad Anis Chemli, business director of telecommunications at Gemalto, told Gulf News.

Chemli , however, noted that by 2016 the majority of payment terminals in different merchant locations would be contactless-ready. Soon, the gentle tap of a phone or card will increasingly provide a truly compelling alternative for consumers over their long held attachment to notes and coins, added Chemli.

With the rapid growth in the adoption of mobile technology in the UAE, Gemalto noted that it wouldn’t be long before the mobile phone becomes a ubiquitous device not just for making purchases of goods and services, but also in banking. Mobile commerce as a whole will likewise expand further.

Citing the latest figures from Junifer Research, Chemli noted that the number of mobile phone users who use mobile banking information services in the Middle East and Africa reached 19.8 million at the end of 2012 and is expected to hit 82.1 million users by 2017. Even consumers in the lower socio-economic segments now have access to more affordable handsets, lower tariffs and improved network coverage.

It took a century to bank a billion individuals through the traditional means but we can imagine that mobile banking could accelerate the process dramatically and bank a billion in the next ten years,” he said.

According to Forest Research, consumers worldwide made $12.84 billion (Dh47.1 billion) in mobile payments in 2012. The figure is forecast to increase by 601 per cent to $90.05 billion in 2017.

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