Across the globe, cash transactions are fading into history as we see a surge in uptake of increasing numbers of cashless payment methods. MENA is no exception; forecasters predict there will be 139 billion non-cash transactions taking place in 2022, an increase of 25% year-on-year.
Meanwhile, a survey of banks found that many predict that by 2025, cash will account for less than 5% of spending in the Middle East.
But what exactly is driving this move away from cash? There are several factors to consider:
The global pandemic:
COVID-19 has changed numerous things about the way we conduct our lives, and this includes how we make purchases. Although the MENA region was already moving in the direction of becoming a cashless society, the pandemic has certainly spurred this trend along.
The reasons are twofold:
- Physical restrictions have forced people to spend less time in physical stores and more time shopping online. Although many shoppers already had a preference for digital in-store payments using cards or a mobile wallet, those that used to pay with cash have been forced to turn to non-cash alternatives.
- After public health warnings about how the virus spreads, many consumers are choosing to avoid handling cash altogether because of the health risk it poses.
- The cumulative effect is that 73% of MENA shoppers are now shopping online more often as a result of the pandemic, and a significant proportion intend to continue this habit even after things return to normal.
More digital natives shopping
Digital natives have grown up with the idea of cashless transactions, whether by card, bank transfer, or — more recently — e-wallets and mobile transactions utilizing QR codes. They value the convenience of not having to withdraw cash, keep it safe, and ensure they always carry enough for their purchase.
The older generation, on the other hand, are more likely to stick with what they know. They are wary of this ‘invisible money’ concept, and would prefer to keep their earnings safely where they can see them. It doesn’t help that there are constant reports of growing online payment fraud, and older consumers may be less aware of how to protect their identities online.
But as the years go by, it’s inevitable that more and more people will feel comfortable adopting digital payment methods. We’re already at the point where 70% of people in the MENA region are using some form of contactless payment, and four out of five say they have found it easy to adopt these new payment methods.
Online retailers and payment providers shouldn’t relax just yet though; as more consumers explore these alternative ways to pay, they become more attentive to the little details that make one platform easier to use than another. Now is not the time to drop the ball on UI/UX.
Innovation and regulation
Consumer demand for a cashless society is only one part of the puzzle. Without sturdy government backing in terms of infrastructure and industry regulation, companies have little incentive to innovate new solutions to meet this demand.
Fortunately, MENA countries are moving forward on all these fronts and enabling the non-cash movement to progress.
Banks in countries like Qatar have started to roll out contactless card payments, which allow consumers to make a PoS transaction by simply tapping their card on a terminal. Meanwhile, we at Dibsy are continuing to remove friction from online payment experiences, making it easier for customers to forgo cash.
How merchants can profit
All of this means that merchants need to quickly adapt to accept the cashless payment methods that consumers wish to use. But this doesn’t mean having to invest huge sums in developing custom payment solutions that will never keep up with the fast-changing industry.
Working with a payment service provider enables seamless transactions across a wide array of platforms, with easy integration and the ability to scale at speed while keeping transactions completely secure.
Merchants also benefit from the industry expertise of a provider that is on the cutting edge of payment trends, and is always working to perfect the customer experience as we move closer towards a cashless society.