Although electronic payments are growing quickly around the world, cash still seems to be the preferred method of payment in the Middle East.
According to Rajeev Kumar, general manager at MasterCard for the Middle East and Africa markets, between 85 and 90 percent of retail transactions in the region are still completed with cash and checks. One country in particular, the United Arab Emirates, has a large potential to become the region's leading card payment nation due to the expansive wealth there.
"The UAE is one of the leading countries in the Middle East in terms of adoption of electronic payment technologies and the high Internet and mobile penetration points to huge potential for mobile payments to increase," Kumar told the Dubai-based Khaleej Times. "Prepaid solutions in general are witnessing increased popularity including payroll, general purpose reloadable, gift, affinity and multi-currency prepaid cards, something that was previously missing from the UAE market."
Room for growth in the Middle East
Given the fact that a majority of consumers still use cash to complete everyday transactions, there is a lot to be excited about regarding digital and electronic payments in the region. Although cash is sovereign, it's likely consumer mindsets will shift as e-payments continue their modest growth in the region.
The latest and most popular products include prepaid cards and multi-currency prepaid cards that aren't directly linked to the customer's bank account. However, the recent increase in mobile adoption in the region could lead to a serious upswing in m-commerce. Econsultancy recently cited a We Are Social study that found mobile penetration in the Middle East was noticeably higher than the global average. In fact, Saudi Arabia and the UAE both had mobile penetration rates above 168 percent last year, highlighting the potential growth for e-payments in the near future.
Kumar said there still remains a common misconception about electronic payments in the region: that security is an issue. However, that's an unreasonable concern.
"Electronic payments remain as one of the safest, simplest and smartest ways to pay," Kumar added. "However, the Middle East is a predominantly cash-based society and shifting the primary behavior of the market is going to take time and careful planning."
Businesses have a lot of room to grow in the Middle Eastern region, but it could take a few years for electronic payments to catch up to the pace of adoption around the world.