The Covid-19 pandemic has brought permanent changes in consumers’ spending habits. To combat the spread of the virus, an increasing number of consumers are turning to digital or cashless payment methods, which are convenient, safe, and widely available. This continuing trend away from cash is expected to be more buoyant in the UAE, the Arab world’s second-largest economy, according to Mastercard’s Economy 2021 report.

The report offers some interesting insights into consumer behaviors and spending and predicts a shift in the payment methods of consumers of the UAE and the wider Middle East region. It also stated that the pandemic has accelerated the growth of online banking, disrupted FinTech, and created new opportunities to increase financial inclusion in the UAE.

“The continuing trend away from cash is expected to be more persistent in economies such as the UAE, which already has a resilient e-commerce infrastructure and a young, digitally savvy population,” Mastercard said in the aforementioned report.

“As e-commerce rapidly becomes a way to pandemic-proof a business, adoption by older generations and added convenience and lower costs for consumers will contribute to the continued growth of digital demand in 2021,” it added.

The report revealed that 73% of consumers in the Emirates were shopping more online than they did before the pandemic.

“This growth of the digital economy represents a coming of age for e-commerce, a turning point in bridging the digital divide. We are heading for a multi-speed global recovery that favors low-touch over high-touch...Small businesses and micro-merchants are especially crucial to the region’s economies and by enabling them to accept digital payments, we can connect more people and communities to financial freedom and eventual prosperity,” stated David Mann, Mastercard’s Chief Economist for Asia and MEA.

It is worth noting that there is sufficient evidence pointing to a cashless shift in the UAE. In a separate poll conducted by Standard Chartered, two-thirds of UAE residents expect the country to become fully cashless by 2030. A McKinsey survey also found out that UAE consumers are 10% more likely to use a credit card or a digital wallet, with 20% stating they are less likely to use cash when making a payment.

Consumers are also keen on having alternatives to handling cash, pens, and keypads while shopping in person. In fact, 74% of UAE customers, compared to 47% globally, said they would not shop at a store that does not offer a contactless way to pay, according to the latest report by Visa.

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