Payments Snapshot in United Arab Emirates (UAE) - Coronavirus (COVID-19) Sector Impact

Payments Snapshot in United Arab Emirates (UAE) - Coronavirus (COVID-19) Sector Impact

Summary

The Coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy affecting millions of people globally. The contagious Coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring it a pandemic on March 11, 2020. The virus has spread to 190 countries/regions with almost 15.2 million confirmed cases, with its spread outpacing other major infectious outbreaks from the past.

The ongoing pandemic has affected the UAE’s economy, resulting in a fall in tourism and in the domestic consumption of goods and services. According to the central bank, the country’s economy shrank by 1% year on year in Q1 2020, and it expects a contraction of 3.6% for the full year. However, economic activity is expected to recover in the second half of the year, supported by the government’s stimulus measures as well as a rise in consumer spending with several lockdown restrictions now eased.

On March 15 the UAE announced an economic package worth AED100bn ($27.23bn) to support the dwindling economy and lend support to severely affected sectors. It also offered a AED50bn ($13.61bn) aid to help SMEs cope with the economic impact of Coronavirus.

This report focuses on the impact of the Coronavirus outbreak on both the economyand the cards and payments industry in the UAE. Based on our proprietary datasets, the snapshotprovides a detailed comparison between pre-COVID-19 forecasts andrevised forecasts of total payment card, debit card, and credit and charge card transactions by value and volume. It also offers information on measures taken by the government to combat Coronavirus.

Scope

- Tourism is one of the sectors most affected by this pandemic. The UAE’s tourism sector contributed to around $45bn of the country’s GDP in 2019. The UAE sees a strong influx of Chinese visitors each year - one in every 16 visitors are from China, and they tend to spend heavily on high-end shopping and on package tours and resorts. Due to the outbreak and its effect on China specifically, this has ground to a halt. Payment companies are losing out due to reduced spending in this critical area. However, a gradual recovery is expected with the government easing travel restrictions; public beaches, parks, and museums reopening; and events held by the likes of UFC taking place. According to the Department of Culture and Tourism - Abu Dhabi, hotel bookings in Abu Dhabi increased 3% in the first week of July 2020 compared to the same period of the previous year.
- Retailers are seeing a huge surge in online sales. Carrefour saw a 32% increase in its online business in the first two weeks of March 2020 compared to the same period of February 2020. The company also saw a 59% increase in new customers on its online platform during the same period. To cater to this growing demand, Carrefour opened six new fulfillment centers across the region. Consumers are opting for online purchases to avoid exposing themselves to disease vectors such as cash and POS terminals. With the rise in online purchases, popular online solutions such as PayPal, AlertPay, CASHU, and Masterpass will benefit.
- The UAE has traditionally been a cash-dominated society. However, cash use is expected to decline due to fears surrounding the virus spreading via cash handling. According to a Visa survey on the impact of COVID-19 on the payment behaviors of UAE consumers published in June 2020, 71% of consumers now prefer digital payments over cash.

Reasons to Buy

- Make strategic decisions using top-level revised forecast data on the UAE payment industry.
- Understand the key market trends, challenges, and opportunities in the UAE cards and payments industry.
- Receive a comprehensive insight into payments market in the UAE.