Is a cashless society taking shape in the Middle East? An Explanation of the Current State of Development

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The trend towards cashless payments has accelerated globally in recent years, and the Middle East has shown strong growth in this wave. With increased smartphone penetration, FinTech innovations and government policy support, more and more Middle Eastern countries are moving towards a cashless society. This article will provide an in-depth analysis of the current status, drivers and future trends of cashless payments in the Middle East.

1. Current developments in cashless payments in the Middle East

(1) Gulf countries lead digital payments transformation

Gulf Cooperation Council (GCC) countries such as the UAE, Saudi Arabia and Qatar are leading the way in digital payments:

• UAE: 2023 data shows that the country has more than 5 million mobile wallet users, accounting for over 50% of the population.Apple Pay, Samsung Pay and local platforms such as Beam Wallet are widely used.
• Saudi ArabiaAs a member of the G20, Saudi Arabia is actively pursuing its "Vision 2030", which aims to achieve 70% of non-cash transactions by 2030. Currently, Mada (the local debit card network) dominates the market, with "Saudi Payments" driving the popularity of e-wallets.
• Qatar and Bahrain: High Visa and Mastercard penetration and rapid growth of local e-wallets such as "QPay".

(2) Gradual follow-up by other countries in North Africa and the Middle East

Egypt, Jordan and other countries started late but grew at a remarkable rate:

• Egypt:: Instant money transfer systems such as InstaPay are growing rapidly, and the Government is encouraging bank accounts to be tied to mobile phone numbers for small transactions.
• Lebanon and Iraq:: As a result of the economic crisis, some people have turned to stable currencies or cross-border digital payments.

2. Key factors driving cashlessness in the Middle East

(1) Government policy support

Countries launch several measures to promote contactless payments.

• abbr. for Saudi Arabia:: "Fintech strategy" to support start-ups and make it mandatory for merchants to accept electronic payments.
• UAE:: The Cashless Dubai programme aims to reduce the circulation of banknotes by 50% by 2025.

(2) FinTech investment surges

According to Magnitt Report, Middle East FinTech Funding Reaches $2.5B+ by 2023, with Major Flows to.
✔️ BNPL (Buy Now Pay Later): Tamara (Saudi), Tabby (UAE)
✔️ P2P transfers & cross-border remittances: Pyypl (Bahrain-based)
✔️ CBDC (Central Bank Digital Currency): UAE Dirham Pilot Project

(3) Changes in consumption habits after COVID

The epidemic has prompted more people to choose online shopping/code payment, with Generation Z becoming the main user group.

[H3] 3. Challenges and obstacles

Despite the promise, there are still constraints.

In addition, the high cost of compliance is also affecting small business access rates.

[H4]4 . Future Outlook: When will Cashless really be realised?

It is expected that core markets (e.g. UAE/KSA) may approach Nordic levels around 2030. However, it will take time to completely phase out banknotes.

[H5] Conclusion

Taken together, and with the concerted efforts of the countries of the Middle East, the region is steadily moving into the digital economy - a long way to go, but one to look forward to!

5. Key models and innovative applications of cashless payments in the Middle East

(1) The Rise of the E-Wallet

The e-wallet market in the Middle East is growing at a rapid pace, mainly due to the high penetration of smartphones and higher acceptance of digital payments among the young population. Example:

• STC Pay (Saudi Arabia): Launched by Saudi Telecom, the number of users has surpassed 8 million and supports P2P transfers, online shopping and cross-border money transfers.
• Beam Wallet (UAE): Integrates local banks and merchant resources to provide functions such as code payment and bill payment.

In addition, international giants such as Apple Pay and Google Pay are also accelerating the layout of the Middle East market, forming a situation of competition and co-operation with local companies.

(2) Explosive growth of the BNPL (buy now pay later) model

"Buy now, pay later" is particularly popular in the Middle East e-commerce space, with key players including:

• Tabby (UAE)It covers major e-commerce platforms such as Souq and Noon and allows consumers to pay in instalments with no interest.
• Tamara (Saudi Arabia)The company has been invested by Softbank, and its transaction volume will grow by 3,00% in 2023 year-on-year.

This model has lowered the barrier to payment for consumers and fuelled the boom in online retail.

[H3] 6. Progress in the exploration of a central bank digital currency (CBDC)

Several Gulf countries are actively studying CBDC to improve the efficiency of their financial systems.

More practical applications are expected to come to fruition in the coming years .

[H4]7 . Innovation in cross-border payments

Due to the high percentage of foreign labour in the region (e.g., 901 TP3T in Dubai), the following solutions are of interest.
✔️ RippleNet blockchain network has been adopted by several local banks
✔️ Pyypl launches virtual card to support instant cross-border transfers

These technologies significantly reduce remittance fees and time costs.

[H5]8 . Security Challenges and Responses

As cashless transactions increase, cybersecurity risks rise in tandem.

- Biometric authentication (e.g. iris payments by ADIB Bank)
- Artificial Intelligence Anti-Fraud System Deployment Rate Increases 35%
- Governments to strengthen data protection legislation (example: Saudi PDPL regulation)

[H6]9 . Expert Forecast: Key Trends for the Next Five Years

1️⃣ "Super App" Integration Trend - One-stop platform similar to WeChat Pay to emerge
2️⃣ Cryptocurrency Compliance Accelerates (Dubai has issued first exchange licences)
3️⃣ Internet of Things (IoT) Autopay Scenario Expansion (smart car refuelling/charging etc.)

[H7]10 . Recommendations for businesses .......................

For payment service providers wishing to enter the market.
◉ Priority access to Saudia/UAE licences
◉ Adaptation to Islamic financial norms (prohibition of interest clauses)
◉ Co-operation with local telecom operators to enhance coverage

[H8] Conclusion
Despite challenges such as cultural adaptation and infrastructure gaps, the Middle East is likely to be the world's next model for a cashless society, thanks to its strong economy and policy push. Continued focus on FinTech innovations and regulatory changes will be critical.