Preparing For An Omnichannel Future
The Mastercard New Payment Index reveals a strong appetite for digital payments—a reminder to businesses that it’s time to expand their offerings.
With rising consumer interest around new payment technologies, the expectation is now on businesses to adapt to digital life and the changing face of retail. According to the Mastercard New Payments Index, more than three in four UAE consumers (76%) say that they prefer to shop at small businesses that have an online presence as well as in-person service.
The study reveals that the adoption of new payment technologies is growing, and that consumer appetite for new, fast, and flexible digital experiences is on the up. In fact, the study findings show that 97% of UAE consumers will consider using at least one emerging payment method, such as cryptocurrency, biometrics, contactless, or QR code, in the next year. This trend coincides with the COVID-19 pandemic. Early in the crisis, stores closed and social distancing took hold, forcing retailers worldwide to move their businesses online, embrace e-commerce, and explore new ways to pay.
Commenting on the changing landscape of retail and payments, Girish Nanda, Mastercard’s country manager for the UAE and Pakistan, explains that consumers today expect convenience, and that it is up to businesses - including small enterprises - to respond to the demand by preparing for an omnichannel future. “We foresee that speed and security will play an even more important role in delivering these needs and we expect continued growth of new solutions to provide a seamless payment experience,” says Nanda. “Together with our partners we are working to enable the ease of acceptance of emerging payments that are coming out strong in a post-pandemic world,” he adds.
Responding to consumers
According to the Mastercard New Payment Index, 78% of UAE shoppers are more excited to shop at retailers that can offer the latest payment methods, while an equal proportion say they are more likely to be loyal to retailers who offer multiple payment options.
Digital wallets, in particular, have become increasingly popular thanks to the innovation and agility of the UAE banking sector. In fact, 42% of UAE consumers say they currently use a digital wallet and more than six in 10 (66%) say they plan to use one within the next year.
As one way to address this consumer preference for fast, touch-free payment experiences, many merchants are turning to contactless payments. Already, 88% of in-person transactions are now contactless in the UAE, with most merchant categories seeing an increase as a share of total inperson transactions year-over-year in the first quarter of 2021.
This behavior shift is reinforced by the desire for consumer choice, with 83% of study participants saying that they expect to make purchases when they want and how they want. As the demand for emerging payments and choice continues, so too does the need for a wider range of payment solutions, relevant insights, and related products.
Cryptos, QR codes, and biometrics
Today consumers can buy, sell, and trade cryptocurrency as a commodity or investment. What’s more, they are increasingly showing interest in being able to make everyday purchases using crypto assets. As global attention on digital currencies continues to grow, 50% of people in the UAE say they plan to use cryptocurrency in the next year, with more than half (63%) noting that they are more open to using it than they were a year ago. In light of growing demand, Mastercard announced earlier this year that it would start supporting select cryptocurrencies directly on its network. However, while consumer interest in cryptocurrency—especially floating digital currencies such as Bitcoin—is high, work is still required to ensure consumer choice, protection, and regulatory compliance.
Perceptions of safety and convenience have been front and center for people over the past year, with 55% of UAE consumers saying they plan to use biometric verification methods like gait or walk assessments, or fingerprint authorization. Furthermore, 68% of consumers reportedly feel safer using biometrics to verify a purchase than entering a pin.
Against this backdrop, growing markets are leveraging QR-based options as a clean and convenient way to interact with merchants, while 56% of people in the UAE expect to use more payment technologies like QR codes in the next year. Nearly 70% of consumers find that QR codes are cleaner and more convenient for inperson payments, and that they also have significant potential to reduce the cost of payment acceptance and increase financial inclusion.
Digital payments accelerate across the region
Consumers across the Middle East and North Africa (MENA) are unanimous in their acceptance of digital payments—a reality that has been galvanized by the pandemic. In fact, over two-thirds of respondents (65%) agree that they have now tried a new payment method that they would not have tried under normal circumstances.
Contactless technology was the digital catalyst to explore new payment options because of its fast, secure, and touch-free experience. Between the first quarter of 2020 and the same period in 2021, more than 100 markets saw contactless as a share of total in-person transactions grow by at least 50%.
Now, more than a year into the COVID-19 pandemic, contactless is showing its staying power and dynamism. In the first quarter of 2021 alone, Mastercard saw one billion more contactless transactions worldwide as compared to the same period of 2020. Looking ahead, all signs point to a continued growth path for contactless, with nearly seven in 10 consumers globally expected to use a contactless card this year.
With this interest and consumer demand also comes a greater expectation on businesses to provide multiple ways to shop and pay. In fact, 61% of MENA consumers say they will avoid businesses that do not accept electronic payments of any kind. Here, the call to action is clear: to ensure their future success and to meet the demands of consumers, businesses must expand their options at checkout and prepare for an omnichannel future.