Until a year ago, Omar Shamiyeh’s clients used cash, cheques, or bank transfers to make payments. The system was not exactly convenient, reliable, or quick. “We had to collect and deposit cheques; in a few cases, the transfer would not come through. So we switched to digital wallets last year, and almost immediately, our financial system transformed! All we had to do was send a payment link to the client, and the job was done,” says the co-founder of Cosette Solutions, a Doha-based marketing agency.

While 75% of Shamiyeh’s clients now make their payments through the mobile wallet SkipCash, in the early days, the shift was not exactly seamless. “Some clients thought it was a fraud. We had to educate them about digital wallets. It took a couple of weeks,” he recalls.

TRANSITION TO DIGITAL ECONOMY

In the last decade, as Qatar intensified preparations for the FIFA World Cup and began its transition towards a digital economy, mobile wallets and contactless payments got a big push from the government. Like the rest of the world, the Covid-19 pandemic also led to faster technology adoption. By November 2022, when it was time for the big tournament, all global digital wallet services, such as Apple Pay, Samsung Pay, and Google Pay, were being accepted in Qatar.

“The pandemic was a tipping point for digital payments worldwide. Overnight we saw a strong desire for people to use contactless payments. What started as a desire for a touch-free experience also turned into a desire for convenience. The current financial ecosystem in Qatar is digitally oriented, which has helped drive further adoption of digital payments in the country, such as Google Pay,” says Dong Min Kim, Director, Product Management at Google Wallet, adding that there has been “solid growth” in the adoption of the digital wallet in Qatar since its launch last year.

However, in a nation brimming with traditional and modern businesses and with a large section of customers — like Shamiyeh’s clients — accustomed to cash, the shift needs policy intervention and change in customer behavior. The National Fintech Strategy recently unveiled by the Qatar Central Bank, which prioritized digital payment services, was a step in this direction.

“It’s been over three months since the World Cup, and people continue using QR codes for payments, booking tickets online… Even traditional sectors such as schools, the government, and medical organizations are assessing ways to integrate fintech solutions into their systems,” says Mohammed Al Delaimi, founder and managing director of SkipCash.

FINTECH GROWTH

The mobile payment app saw a “more than 300% increase in transaction volume in November-December,” says Delaimi. With “new laws, new infrastructure, and new systems in place” to facilitate businesses, the fintech space is primed for rapid growth.

Mohammed Suleiman, the co-founder of KARTY, a financial solutions startup, was also convinced of a strong appetite for digital payments among customers last year when the demo version of his app was launched. “At least 23% of the registered people said they would recommend it to others. That’s a healthy number.”

Mobile payments, contactless payments, crypto, national digital currencies, and buy now pay later (BNPL) are among the main innovations dominating the digital payment industry, points out Nizar Hneini, Senior Partner and Head of Digital and Innovation at KPMG Qatar. He believes the main financial regulator, Qatar Central Bank’s FinTech strategy, will help the sector cope with these innovations.

“The fintech strategy is bold, covering all innovations in fintech and digital payments. A key aspect here is the nudge to local banks to partner with fintech to bring new but safe products to the citizens and residents in Qatar,” he explains.

CASH STILL RULES?

However, some people in Qatar still find it “safer” to use cash, especially in the home delivery space, underlined KARTY’s Suleiman. “They think: what if my order is delayed? What if I want to cancel my order? That is where we need more specific solutions such as money-back assurances,” he says.

In Delaimi’s experience, too, in “cash-intensive” sectors such as food delivery where “nearly 40% of customers” still opt for COD (cash on delivery), there is a need for better systems. “We are also testing a new system at SkipCash where the QR code can be printed on the invoice, and the customer can scan it and pay after receiving the order. So the customer will have the power to cancel the order in case of problems. This will help change customer behavior,” he says.

KPMG’s Hneini agrees that although the technology infrastructure in Qatar is second to none, “limited acceptance” among merchants is still a challenge in the country’s transition to a cashless economy. 

“Expanding acceptance networks will be necessary to make digital payments viable for consumers in all parts of the country. The second major challenge is inclusion, especially among Qatar’s blue-collar expat population, and requires special programs from the banks and payment service providers. And lastly, many consumers in Qatar may hesitate to use such payment systems due to concerns about security and privacy. Building trust in digital payments will be key to encouraging further adoption,” he says.

WHAT THE FUTURE HOLDS

With such guarantees in place, Suleiman is confident that digital payments are becoming the norm in Qatar. He also believes that Qatar cannot be compared to other countries in Europe and South Asia — where mobile wallets have taken off in a big way — simply because while other nations have a higher volume of mobile payments because of their populations, “the spending per person is much higher in Qatar and so the transition will be faster.”  

In the coming years, Delaimi predicts apart from an increase in the volume of mobile wallet payments, the fintech sector will also see integrated platforms for insurance, crowd-funding, and wealth management.

In the future, as customer behavior and systems get in sync, the wallets and digital payment platforms will become “hyper-personalized”, predicts Suleiman. “For instance, if a person is a digital nomad, their wallet should have options for travel insurance, laptop, and mobile insurance. Similarly, students’ identities can be verified through their university email addresses, and they can get discounts on groceries or reward points for shopping, etc. This happens in Europe and can be brought to Qatar as well,” he says.    

Meanwhile, at Shamiyeh’s marketing agency, the switch to a digital wallet has brought in an added benefit. “It is an immensely sustainable practice. Our paper usage has reduced by 80%!” he says.