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When you think about the future of digital payments, what comes to mind? A seamless interface that anticipates your needs, the convenience of instant transactions, or the guarantee that your funds will always be safe?
In reality, these are all part of the bigger picture. In just over a decade, fintech has advanced rapidly, and the current digital payments landscape would have been almost unimaginable not too long ago. And the UAE has positioned itself at the center of this evolution, defying the global funding downturn and achieving a staggering 92% increase in fintech investment last year.
This accomplishment is nothing short of amazing. As someone who works in this sector and has witnessed this momentum first-hand, I am acutely aware of the immense potential and promise this sector holds for the region’s 23 million small and medium-sized enterprises (SMEs).
With so many possibilities, it’s worth thinking about what the future holds for digital payments in the Middle East. Based on my experience as a founder and entrepreneur in this industry, I believe three key trends will shape the future: user-centric experiences, security, and versatility. Here’s why:
Enhancing accessibility and user-centric experiences
First, there will be an increased focus on improving accessibility and user-centric experiences in digital payments. According to the World Bank, lack of access to high-quality digital financial services is one of the biggest barriers for small and medium-sized enterprises around the world. This challenge is why fintech companies, especially digital payments companies, were born.
Many digital payment providers have been established to serve market segments left behind by traditional banking. As a result, delivering a great digital experience has become a key battleground in which these companies invest most of their resources. Whether it’s developing the most intuitive interface or providing seamless integration with other financial tools, our goal is to make every user’s life easier.
The significant growth of small and medium-sized enterprises across the Middle East (72% of them predict an increase in revenue over the next 12 months) is driving demand for domestic fintech companies to meet their payment needs. To give you an idea of scale, Ziina processed AED 550 million in digital transactions last year. This equates to almost AED 1.51 million per day. There are many other small providers active in this space.
This growing demand from the SME sector will certainly attract new players who will compete to compete with each other with the most innovative products. This is good news for customers who benefit from the ever-evolving digital payments landscape.
Prioritize security
While small business owners value a streamlined user experience, they also need peace of mind that the money they handle through digital platforms is safe.
Providing this level of security assurance requires obtaining a license from a central bank or regulator, which includes meeting rigorous standards for risk management, compliance, and cybersecurity.
Licensing is often a weak point for many fintech companies, especially during growth stages when other priorities take precedence. In fact, only a limited number of digital payment providers are fully licensed in their jurisdiction. Revolut, one of Europe’s largest fintech companies, famously waited more than three years to obtain a banking license in the UK.
However, the benefits of achieving this milestone, although difficult and time-consuming, are immense for both businesses and customers. For example, securing the UAE Central Bank’s Stored Value Facilities (SVF) license, which Ziina is proud to have achieved earlier this year, will help the UAE-based company aim to provide top-level digital wallet and payment solutions. This is extremely important for fintechs. This requires extensive fine-tuning of risk management and compliance systems, which not only strengthens internal operations but also significantly increases credibility with small and medium-sized business customers.
embrace versatility
Finally, versatility is key. Most small businesses now rely on omnichannel sales, having a presence not only on platforms like TikTok and Instagram, but also in physical locations like pop-up shops and stores.
However, there is a significant gap in omnichannel payment solutions for small and medium-sized businesses. Currently, 33% of small businesses rely on four or more financial service providers for their daily needs. This presents an exciting market opportunity for companies that can offer comprehensive 360-degree payment solutions. Providers that can meet the financial needs of small businesses across all channels are uniquely positioned to capitalize on this market gap and attract customers.
In other words, versatility is the future of digital payments. As with user experience and security, increased competition in this area means customers stand to gain the most.
conclusion
Small businesses are driving the fintech revolution across the region, driving a surge in demand for digital payments. In the UAE alone, SMEs already account for more than 60% of non-oil GDP, and their number is expected to soar to 1 million by 2030.
The fintech industry is facing a critical juncture as these businesses expand and demand on financial service providers increases. Companies that offer the most user-friendly, secure, and versatile solutions will outperform their competitors. Its innovations benefit users and contribute to the growth of a dynamic ecosystem that will shape the future of digital payments.
Related: Charting a new path: Embracing the UAE’s entrepreneurial boom
