The Arab community’s inclination to use cash has been heavily documented, but a recent survey challenges these studies and indicates consumers are keen to start making mobile payments in the Middle East.
According to a survey commissioned by the digital security company, Gemalto, almost nine-out-of-ten U.A.E residents reported they would like to pay for goods and services with mobile wallets. Numerous surveys in circulation have cited the opposite, stating that Middle East consumers were not ready to adopt mobile payments due to security concerns. However, consumers are showing a change of heart.
Historically, Arab consumers have been known to have a perpetual attachment to paper banknotes and coins. For example, 75 percent of transactions in the U.A.E. are paid for with cash. A pervious survey published by Rakbank indicated that over a third of U.A.E. residents were wary using mobile phones for payments because they can be easily hacked. However, Gemalto’s study dispels these reports as it cites only a small proportion of the respondents stated they have security fears.
The Middle East’s payment ecosystem is on the cusp of revolutionary change, as banking technology and legislation continues to change. With all of these financial advancements, it makes it nearly impossible for consumers to learn to adapt.
NFC technology, the device which facilitates mobile payments, is popping up everywhere in the MENA region. The mobile wallet is still in primitive stages and has yet to hit mainstream payments. The launch of new technology, such as the mobile wallet, will require more patience in these regions because merchants and banks need more time to redesign the infrastructure needed to accommodate such changes. Merchants cannot just begin accepting mobile payments with the snap of a finger, these changes require time to install the necessary equipment and network.
Mohammad Anis Chemli, business director of telecommunications at Gemalto, told Gulf News, “For NFC to go mainstream in the UAE, like anywhere else in the world, the main challenge is still the migration to a fully NFC infrastructure, which doesn’t happen overnight but the good news is that the ecosystem is being put in place.”
However, Chemli indiacted a sense of optimism when he stated that the majority of payment terminals across banks and merchants in the region would indefinitely be “contactless ready” by 2014.
“Soon, the gentle tap of a phone or card will increasingly provide a truly compelling alternative for consumers over their long held attachment to notes and coins,” he stated.
Gemalto noted that the growth of mobile penetration rates in the U.A.E. and across the Middle East were increasing aggressively. The study stated that more than 80 million MENA consumers would be engaging with mobile banking applications by 2017, which is good news for all stakeholders involved. At present, the 2012 statistics indicate there are 11.9 million mobile users in the area. Pervasive use of mobile applications will further encourage the increase of mobile commerce, mobile banking and of course, mobile payments.
Additionally, it is not only the affluent individuals who are making such sophisticated payments, but the consumers in the lower socio-economic classes are, too. Affordable handsets, greater network coverage, and less-costly tariffs have all helped to attract a wider range of mobile consumers in the Middle East.
“It took a century to bank a billion individuals through the traditional means but we can imagine that mobile banking could accelerate the process dramatically and bank a billion in the next ten years,” concluded Chemli.
To read the full report at Gemalto click here, or to read the full article at Gulf News click here.
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