The UAE payments industry has demonstrated resilience amid ongoing global challenges and is projected to experience robust growth, with total revenue expected to surge by 55 percent to reach a record $19.8bn in the next five years, according to global consultancy firm Boston Consulting Group (BCG).
BCG said growth in the country’s payments space is being fueled by a surge in digital transactions and technological advancements driven by the emergence of generative AI (GenAI).
The consultancy firm said in its Global Payments Report 2023 report that the total revenue for the UAE payments industry grew at a compound annual growth rate (CAGR) of 9.7 percent between 2018 and 2022 to $12.8bn.
The report highlights the Emirates’ distinctive position as a global hub for innovation, where payment providers are poised to “redefine their roles and services” amidst the dynamic evolution of the global payments ecosystem.
BCG projected that the overall revenue growth in the UAE’s payments sector will increase in the next five years to a CAGR of 3.6 percent pushing the revenue pool to $19.8bn.
The growth forecasts exceed the global payments industry’s projected CAGR of 6.2 percent, highlighting the UAE’s position in this rapidly evolving landscape.
“While our research shows a slower growth seen globally, the UAE payments revenue pool is expected to grow in the years ahead. The UAE is experiencing a defining moment for those in merchant services, issuers, transaction banks, and payment infrastructure,”
said Mohammad Khan, managing director & partner at BCG.
Khan attributed the growth in the country’s payments industry to the adoption of innovative technologies that are being utilized across organizational processes.
“This evolution will improve customer pathways and offer specialized solutions, resulting in heightened service quality and profit growth,”
he said.
UAE’s evolving payments space
The significant transformation in the UAE’s payments industry can be attributed to operational resilience, GenAI, risk management and compliance, and mergers and acquisitions.
The changing customer behaviors and reimagined customer experiences – marked by an increasing desire for frictionless, more seamless, and intuitive value-added banking experiences – are driving incumbents to develop open, collaborative financial ecosystems.
BCG said the growth in the UAE’s payments industry can be attributed to a combination of factors, including the transition from cash to non-cash transactions.
Earlier in June, Brookfield Asset Management agreed to acquire Dubai’s Network International Holdings in a deal valued around $2.8bn, as part of the Canadian investment firm’s broader strategy to bolster its presence in the country’s growing payments sector.
The deal follows Brookfield’s acquisition of a 60 percent stake in Magnati, the payments business of First Abu Dhabi Bank, in February 2022 in a deal valued at $1.15bn. Brookfield said it sees a strategic and industrial logic in pursuing a potential merger of Network and Magnati.
News Source: Gulf Business
