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In case you're missing it, digital payments are now everywhere around us - from mobile payments using scanned codes, to credit card transactions using biometric authentication.
It's easy to imagine what happens next. The line stalls as a shopper rummages for her wallet and counts out the necessary cash to make her purchase. Time ticks by while the vendor counts the currency and distributes the correct change. Meanwhile, some customers may give up and leave, costing the store potential sales. At the end of the day, the shopkeeper spends considerable time counting currency, reconciling the amount of money on hand with the day's sales, preparing to make a deposit at the bank and preparing the cash on hand for the next day. He realises he is short Dh50 and wonders if he accidentally gave incorrect change to a customer.
There are many reasons for the modern global economy to move away from a heavy reliance on cash. A unique study commissioned by Visa and conducted by Roubini ThoughtLab tells us why: the use of cash is time-consuming, inefficient and sometimes risky. The research explains why cities around the world should consider moving toward increasing their adoption of digital payments, and demonstrates the potential benefits of this increase to consumers, businesses, and governments across 100 cities worldwide. The study found that in Dubai, increased usage of digital payments, such as cards and mobile payments, could yield a net benefit of up to $2.2 billion (Dh8.08 billion) annually to consumers, businesses and government.
Dubai's government recognises this and is pushing a Smart City agenda as part of UAE Vision 2021. Several regulations that encourage people to pay for utility bills and public services via digital platforms have already been implemented. As an example, earlier this month, it was announced that residents who pay their vehicle and driving fines by physically going to a Roads and Transport Authority service centre instead of simply paying online, will have to pay Dh100 more. The move directly places a monetary benefit towards paying digitally.
Merchants are also playing an instrumental role in driving the acceptance of new payment technologies. In the UAE, for example, 63 per cent of the point-of-sale devices at merchants can accept contactless payments. This means customers can complete transactions with just a simple tap of their card or smartphone.
Lastly, the most crucial and obvious shift towards a cashless economy will come from the end consumer. The average consumer in the UAE is very receptive to new technologies and embracing of new payment methods and with a smartphone penetration rate of 78 per cent, the UAE is one of the first in the region to see the launch of global wallets such as Apple Pay and Samsung Pay.
Ultimately, education is key. Consumers need to be educated of the personal benefits that digital payments bring to their lifestyles, while merchants and the government must be informed on the quantitative benefits that electronic transactions add to their businesses and the country's economic measures. Visa's recently published study, Cashless Cities: Realizing the Benefits of Digital Payments, categorises Dubai as "digitally maturing".
From mobile payments using scanned codes, to credit card transactions using biometric authentication, digital payments are now everywhere around us. With billions of connected devices such as watches, cars and fitness trackers now a part of our everyday lives, connectivity is only going to become more ubiquitous. As communities and cities become less reliant on cash and better equipped to offer fully digital payment experiences, outdoor markets like the one in Satwa, and the shoppers who frequent them may not only become more efficient, they could also strengthen their contribution to the global economy. This is the true power of digital payments.
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