While the UAE is at the forefront of digital payments, around 20 per cent of transactions of consumers surveyed is still in cash, a new study has shown.
According to Visa’s ‘Where Cash Hides’ research, in the UAE, peer-to-peer (P2P) transactions (43 per cent) and everyday spending (27 per cent) form a large portion of cash usage
The report — based on a survey of 3,400 of individuals and 30 in-depth interviews across UAE, Kuwait, Oman, Qatar, and Saudi Arabia — included questions about overall frequency of cash usage and specific cases where respondents would use cash more than other payment methods. Based on these results, the report identifies cash-heavy categories and consumer drivers of cash usage and proposes easier, more secure digital payment solutions for both consumers and local businesses.
The report found that consumers prefer using cash in specific transactions, mainly in the P2P segment. Within the P2P segment, tips (55 per cent), money exchanges between friends and family (50 per cent), and international money transfers (40 per cent) are the prime areas of cash usage.
Everyday spend like taxi (46 per cent), farmer markets (44 per cent), and grocery stores (25 per cent) are mostly where cash is used. Other cash-heavy areas include events (23 per cent), healthcare and beauty (23 per cent), education (23 per cent) and apparel and jewelry (21 per cent).
Motivators for cash usage
Respondents’ perception of convenience (64 per cent) was cited as the top reason they prefer using cash in the specific cases identified by the research. Other reasons include perception of control and safety (39 per cent), availing cash discounts (32 per cent) and acceptance (29 per cent).
The study identifies situational cash usage, notably in rental payments, exchange houses, and farmer markets transactions. Efforts to introduce convenient, fast and easy solutions such as Visa Direct (P2P, tips and other disbursements, and remittances), and Tap to Phone (low-cost acceptance solution for SMBs, freelancers and taxi) will drive digital payments and increase card acceptance.
Encouraging mobile payments and contactless usage presents a pathway to increase digital payments usage for everyday expenses. This requires education on acceptance and security of digital payments for both banked and unbanked population.
Salima Gutieva, Visa’s VP and country manager for UAE, said: “We see a positive trend in card payments in UAE, with a 62 per cent wallet share that continues to grow. However, there remains categories of spend where consumers in the UAE still use cash. This presents an opportunity to extend the many benefits of digital payments to more consumers, and businesses for a more inclusive digital economy. At Visa, we remain committed to working with the local payments industry — and in line with the UAE government’s cashless agenda – to accelerate the economy’s transformation and make a better payment experience a reality for everyone, everywhere in the UAE.”