Cash or card?

Dig­i­tal pay­ments be­com­ing more pop­u­lar than cash

Middle East Business (English) - - FRONT PAGE -

Re­cent re­search by McKin­sey & com­pany, a global man­age­ment con­sul­tancy firm, now shows that dig­i­tal pay­ments will de­throne “cash as king” in the Mid­dle East and boost re­gional GDP by nearly $100 bil­lion. As Mid­dle East coun­tries ac­cel­er­ate their dig­i­tal trans­for­ma­tion agen­das with na­tion­wide high-speed tech­nol­ogy con­nec­tiv­ity, one of the big­gest ben­e­fits will be quick and easy mo­bile pay­ments. In the near fu­ture, Mid­dle East res­i­dents will be able to pay for park­ing tick­ets and in-store pur­chases, top up mo­bile phone min­utes and data, and send re­mit­tances via mo­bile apps.

Global case stud­ies

This rev­o­lu­tion has al­ready taken place in other re­gions, most no­tably M-PESA in Kenya, and Paypal glob­ally.


M-PESA is a mo­bile pay­ment and bank­ing so­lu­tion launched in March 2007 and cred­ited with hav­ing a sig­nif­i­cant im­pact on eco­nomic de­vel­op­ment in Kenya. Cash can be sent one place to an­other more quickly, safely and eas­ily than tak­ing bun­dles of money in per­son, or ask­ing oth­ers to carry it for you. This is par­tic­u­larly use­ful in a coun­try where many work­ers in cities send money back home to their fam­i­lies in ru­ral vil­lages. M-PESA is used in myr­iad dif­fer­ent ways - Kenyans pay school fees, col­lect their salaries, shop for gro­ceries, they buy ev­ery­thing from drinks in beer shacks to air­line tick­ets thanks to mo­bile money, send­ing trans­fers at the push of a few but­tons on a mo­bile tele­phone. As per capita in­comes rise, peo­ple will make sav­ings us­ing the sys­tem or might be able to take out loans. Named af­ter the Swahili word for money (pesa), it was orig­i­nally a mi­cro-fi­nance project. The sys­tem is op­er­ated by Sa­fari­com (40% owned by Voda­fone). Less than 10% of Kenyans have ac­cess to fi­nan­cial ser­vices/bank­ing, but more sig­nif­i­cantly nine out of ten adults have ac­cess to a mo­bile phone in Kenya.


Paypal was pur­chased in 2002 by eBay to op­er­ate as the pri­mary trans­ac­tion/pay­ment method for those trad­ing on eBay. In 2014, PayPal pro­cessed $235 bil­lion in pay­ment vol­ume across 165 mil­lion ac­tive cus­tomer ac­counts, and han­dled one bil­lion mo­bile trans­ac­tions. In 2014, the com­pany re­ported a profit of $419 mil­lion on rev­enue of $8 bil­lion. In 2015, Paypal be­came a sep­a­rate or­gan­i­sa­tion from eBay, with eBay share­hold­ers re­ceiv­ing shares in the newly listed Paypal. The beauty of Paypal is that the trasnfer of money hap­pens en­tirely through the sys­tem. Users can then trans­fer the money from Paypal into their bank ac­count with­out hav­ing to dis­close bank ac­count de­tails to the other side of the trans­ac­tion. This makes trans­ac­tions more se­cure. There have been re­ports of some scams through Paypal, but gen­er­ally it is a very se­cure pay­ment con­duit. PayPal is avail­able in over 200 coun­tries and in 26 cur­ren­cies. Cross bor­der pay­ments can be more ex­pen­sive - Paypal is at its best and cheap­est (in most cases free of charge) if the trans­ac­tion hap­pens within one coun­try/ cur­rency as charges will not ap­ply.

How UAE is em­brac­ing this trend

Paolo Gagliardi, Chief Busi­ness Of­fi­cer of the UAE-based fi­nan­cial tech­nol­ogy startup, Tr­riple, said: “Once fast, se­cure, and easyto-use dig­i­tal pay­ments be­come main­stream, that means ‘cash is king’ no more in the Mid­dle East. Us­ing dig­i­tal pay­ments, con­sumers and mer­chants can save time and money, and gain real-time in­sights on trans­ac­tion his­tory and spend­ing trends.” Tr­riple es­ti­mates that about 80% of the UAE’s trans­ac­tions are done in cash, which can be ex­pen­sive to pro­duce and se­cure, and of­ten in­con­ve­nient to use. How­ever, if the Mid­dle East cap­tured its full dig­i­tal po­ten­tial, and made dig­i­tal pay­ments wide­spread, then the re­gion could add $95 bil­lion in GDP by 2020, ac­cord­ing to a re­cent re­port by the con­sul­tancy McKin­sey. Ex­perts agree that the UAE is a global leader in sup­port­ing dig­i­tal pay­ments. Al­ready in 2017, the UAE Cen­tral Bank has is­sued reg­u­la­tions for dig­i­tal pay­ments, sup­port­ing UAE Vi­sion 2021 of smart gov­ern­ment, fi­nan­cial in­clu­sion, in­no­va­tion, and mar­ket com­pe­ti­tion. “The UAE gov­ern­ment has set the stage for dig­i­tal pay­ments to trans­form trans­ac­tions across every in­dus­try ver­ti­cal, across pub­lic sec­tor, to trans­port, tourism and health­care. Tr­riple aims to lever­age re­gional trade shows such as GITEX tech­nol­ogy week to fuel our growth and ex­pan­sion, by show­cas­ing the lat­est so­lu­tions, meet­ing with in­vestors, grow­ing our part­ner ecosys­tem, and net­work­ing with fin­tech lead­ers,” added Paolo Gagliardi. Tr­riple’s mo­bile wal­let pro­vides a se­cure and con­ve­nient open source pay­ment plat­form, which can se­curely con­nect with any gov­ern­ment, or­gan­i­sa­tion, or bank­ing net­work in the world.

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