The United Arab Emirates government is pushing for a cashless economy and, according to reports on Tuesday (Aug. 30), has just taken a major step towards that goal.
Reports by Gulf News said the government has signed a memorandum of understanding (MoU) with 16 of the largest banks in the UAE that will see the entities collaborate to develop a mobile wallet platform. The UAE Banks Federation (UBF) announced the MoU on Tuesday, declaring it “an important milestone” for the nation’s development in mobile payments.
The mWallet initiative was first announced in 2014, with UAE officials looking to have a mobile wallet platform that could replace cash payments without compromising security.
In a statement, UBF Chairman Abdul Aziz Al Ghurair said the platform is a first in the global economy, and it will offer “a vital patch towards a future [of] cashless payments and cash-free environment in the UAE.”
He also pointed to the mWallet’s role in promoting the nation’s Smart Government initiative, an effort launched to promote electronic infrastructures and technologies.
“It is an essential and integral building block of the Smart Government initiative and will give the UAE a head start in transforming its economy for the benefit of residents here,” the official added.
Gulf News reported that the mWallet doesn’t yet have an official rollout date. Once launched, however, the technology can be used by locals and tourists; users do not necessarily have to have bank accounts with one of the 16 banks participating in the efforts, reports added.
The financial services industry of the UAE has made moves to promote mobile wallet technology in the nation. According to reports, just a few days ago, telecommunications firm etisalat revealed its etisalat wallet, a mobile payment and purchasing platform for UAE customers to pay utility bills and make purchases.
But the adoption of electronic payments by consumers has a long way to go.
According to recent data from Euromonitor International, more than three-quarters of transactions made in the UAE in 2015 were with cash. But analysts at Euromonitor said they expect that figure to shrink. Euromonitor Analyst Rabia Yasmeen predicts the value of cash transactions in the UAE to decline by 1.6 percent in 2016 and forecasts a 14 percent increase in card payments this year.
“As the government of the UAE works towards establishing smart technologies in the cards and payments sector, we expect that cash transactions will continue to decline in value terms by a compound annual growth rate of -3 percent during 2016–2021,” Yasmeen told the publication. “Considering the latest MoU signed between 16 banks and UAE Banks Federation, this rate could decline even further.”