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UAE leads Middle East’s digital wallet revolution

Samsung Pay, Apple Pay and Google Pay already allow saving of debit or credit card details.

UNWIELDY wads of cash gave way to plastic money decades ago. Now cash and plastic are passé, and digital wallets are taking over. This shift in the retail sector has led to a huge uptake in digital wallets, especially in the UAE, which is aided by a highly conducive environment for innovation. The UAE is, in fact, spearheading the Arab Gulf region in this field.

Digital wallets are jostling for space in the UAE. Original equipment manufacturer (OEM) pay apps such as Samsung Pay, Apple Pay and Google Pay already allow saving of debit or credit card details and making payments by tapping a mobile phone on point-of-sale (POS) systems using near-field communication (NFC), or simply making payments online.

Telecom-operator provided wallets such as Etisalat’s E-wallet enable consumers to register and top up balances to make multiple transactions. Banks, fintechs and third-party providers have launched wallets like UAE’s digital cash Klip—owned by Emirates Digital Wallet LLC and backed by the UAE Banks Federation (UBF). Or PayIt, powered by FAB. Meanwhile, the e-commerce firm Noon has launched the mobile wallet Noon Pay.

Needless to say, Covid-19 has helped lift digital wallet uptake in a big way in the Arabian Gulf, especially in the UAE, as customers increasingly opt for cashless, contactless transactions.

Other countries in the region are catching on. Consider fintech firm AFS and Bahraini telecom operator Batelco that jointly provide bwallet, easily among the most popular digital wallets with over 50,000 installs. Customers can self-register on bwallet without having to visit the bank and load it through a debit card. A purely digital experience! While bwallet supports domestic and international money transfers, the most popular use case is merchant payments. Customers execute payments via mobile phone by typing the merchant’s mobile number or scanning the QR code generated by the merchant.

Elsewhere, Bank Muscat’s bm Wallet has caught on in a big way within a short timeframe. Bank Meethaq, Bank Muscat’s Islamic banking arm, has launched the Meethaq Wallet. Sohar International and Omantel launched eFloos, using which customers load money into the mobile wallet via debit card and use it to transfer money and make payments.

Mobile money services expand the scope in countries where banking penetration is low. Iraq’s AsiaHawala and Egypt’s Orange Money are facilitating a gamut of transactions. These include remittances for the unbanked, donations for orphans and aid to refugees.

UAE wallet providers have marched ahead by offering a complete digital experience, being flexible, leveraging cloud-native platforms using open-source tech and being fast and nimble in launching products. These factors should hold them in good stead in the years to come.

Customers seek a complete digital experience—from registration and payments to loyalty and rewards programmes. Equally critical is offering a range of services, such as domestic and international money transfer, ticketing, invoicing and merchant payments, aimed at multiple customer segments. A key aim should be to provide a smooth user experience—imagine paying seamlessly in-store using a merchant code, scanning a QR Code or leveraging “tap and pay” and receiving reward points or cash-back after payment. Service providers are moving towards multiple services under one umbrella for a one-stop shop experience.

Digital wallets must be flexible enough to support different needs. For customers wanting to use cards and bank accounts, the service provider must integrate such instruments with the wallet. For those seeking new prepaid wallets, it should offer stored value accounts (SVA) for multiple transactions. And, it should support different payment methods, such as NFC Tap and Pay to QR code scan and pay

Leveraging a cloud native platform with an open-source technology stack is important. For hardware, a digital wallet should enable an open supply chain. Deploying on cloud cuts the cost of launching a digital wallet and payment service, and, thereafter, scale rapidly with the auto-scaling functionality. An open supply chain also enables reduction in hardware.

With competition getting tougher, digital wallet providers must be nimble in launching products and services and maintaining a competitive edge. Moreover, open application programming interphase can go a long way in rapidly integrating with third parties, such as billers, merchants and remittance providers.

This is just the beginning for the UAE and the larger region. The digital wallet space will remain eventful for quite some time to come. Stay tuned!

Srinivas Nidugondi is Comviva’s executive vice-president and COO — Digital Financial Solutions. Views expressed here are his own