The UAE payments industry has witnessed substantial growth, marking a remarkable trajectory in revenue expansion. According to the latest insights provided by the Boston Consulting Group (BCG) in their ‘Global Payments Report 2023’, the total revenue for the UAE payments industry grew at a Compound Annual Growth Rate (CAGR) of 9.7%, reaching a revenue pool of $12.8 billion by the end of 2022. Comparatively, the global payments industry attained a $1.6 trillion benchmark by the same period, with an annual growth rate of 8.3%.
However, amidst these numbers, the forecast indicates a potential global slowdown in growth. BCG anticipates a contrasting trajectory for the next five years (2023-2027), projecting a subdued CAGR of 3.6% for the UAE payments sector, pushing the revenue pool to $19.8 billion. In comparison, the global payment revenues are projected to grow by $2.2 trillion by 2027 at a CAGR of 6.2%.
“The UAE is experiencing a defining moment for those in merchant services, issuers, transaction banks, and payment infrastructure,” said Mohammad Khan, Managing Director & Partner, BCG. “While our research shows a slower growth seen globally, the UAE payments revenue pool is expected to grow in the years ahead.
“This is largely due to the UAE being an early adopter of technological advances powered by GenAI, which is being utilized across organizational processes.”
Competitive edge
The US-based consulting group attributed burgeoning growth in the UAE payments sector to a combination of factors, including the transition from cash to non-cash transactions.
Projections indicate a robust CAGR of 10.9% in transactions from 2023 to 2027, spurred by the country’s shift from cash to digital transactions. Key drivers include technological advancements in payment systems and supportive government initiatives. The UAE’s economic expansion and changing consumer preferences towards digital payments also lead to continuous growth.
“In analyzing the UAE’s payments sector, the significance of GenAI is growing, particularly in its ability to enhance compliance measures as it becomes more integrated into core organizational processes,” said Lukasz Rey Managing Director and Partner, Head of Middle East Financial Institutions Practice, BCG. “Additionally, smart partnering and M&A are valuable in building capabilities in this domain.”
The UAE payments industry is grappling with multiple disruptions, from technological advancements to new market entrants. These include the rapid growth of real-time payments, the introduction of value-added services, and the commoditization of basic payment processing. Over 5,000 fintechs globally are now making their mark in the payments arena, collectively accounting for a significant portion of the industry’s revenue. In this evolving scenario, UAE-based companies must strategize effectively to maintain their competitive edge.
