The UAE payments industry is set to experience significant growth despite a global slowdown in the sector, according to a report by Boston Consulting Group (BCG). The report indicates that while global payment revenues are projected to grow by $2.2 trillion by 2027 at a compound annual growth rate (CAGR) of 6.2%, the UAE payments industry is expected to grow at a CAGR of 3.6% over the next five years, pushing the revenue pool to $19.8 billion. This is attributed to the UAE’s early adoption of technological advances and the country’s transition from cash to digital transactions.
Between 2018 and 2022, the UAE payments industry demonstrated resilience by registering a CAGR of 9.7% and reaching a revenue pool of $12.8 billion by the end of 2022. In contrast, the global payments industry grew at an annual rate of 8.3% during the same period, reaching $1.6 trillion by the end of 2022. Despite a predicted slower growth rate globally, the UAE payments industry is expected to continue its upward trajectory.
The growth of the UAE payments sector can be attributed to various factors, including the country’s shift from cash to non-cash transactions. Between 2023 and 2027, the UAE’s transactions are forecasted to grow at a CAGR of 10.9%, driven by technological advancements in payment systems, supportive government initiatives, and changing consumer preferences towards digital payments.
However, the UAE payments industry also faces challenges such as technological disruptions, the rapid growth of real-time payments, and the introduction of value-added services. Additionally, the industry must navigate the evolving regulatory landscape and embrace risk management and compliance measures. Collaboration and mergers and acquisitions (M&A) strategies are identified as crucial for UAE-based payment providers to maintain their competitive edge in this dynamic market.
The future of the UAE payments industry will be defined by innovation, including the exploration of digital currencies by local central banks. The report highlights four pivotal areas shaping the strategic direction of the industry: operational resilience, generative artificial intelligence (GenAI), risk management and compliance, and mergers and acquisitions.
In conclusion, despite global challenges and a slower growth rate projected for the global payments industry, the UAE payments industry shows promise for significant growth. The industry’s transition from cash to digital transactions, the adoption of technological advancements, and changing consumer preferences towards digital payments contribute to its resilience and potential for future success.
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