Gen Z will impact everything from how we think about the office to how we order our food, and will also determine the future of payments.

Known for their technological proficiency, Gen Zs’ digital payment preferences are driving innovation in the Middle East, especially in the UAE. Recent research suggests that about 20% of people in the UAE have reported a drop in using cash, and as a result, the use of digital payment is growing exponentially.

According to a report by Amazon Payment Services, an instant payment “revolution” is being witnessed in the UAE, as digital payments are expected to rise at a compound annual growth rate (CAGR) of 18.3% from 2021 to 2023 across key sectors.

Talking about the trend, Peter George, Managing Director of Amazon Payment Services, says, “We have identified Gen Z and millennials as being key focus areas of our consumer population, and that actually will influence many decisions for us to go forward.”

“About 61% of Gen Z in UAE have digital wallets, which indicates that they are adopting new ways of payments and technology. On the other hand, millennials have access to disposable income. Many of them are entrepreneurs and are not only users of digital payments from a consumer perspective but also a business perspective. This combination is the unbeatable match in the region.”

By 2023, the UAE, Saudi Arabia, and Egypt’s digital payments markets are expected to double in size nearly, and local firms will flourish there more than ever before.

With various new options available, GenZs are more open to cryptocurrency. “They want to be at the forefront of any new technology or new payment method that comes out, and crypto is one of them,” George says.

“Payments are being reimagined in the region.”

BEGINNING OF END FOR CASH?

The high rate of internet use, the fintech boom, and the sizable young population in the UAE and neighboring countries, according to experts, are driving the digital payment sector.

“The region has become a hotbed of innovation and seamless technology demands. That’s the reason for the evolution of digital payments. Cash going down is a result of digital payments going up. Do we still carry cash? Yes. But we use less of it now,” George adds.

According to George, hospitality, travel, and airlines will be the major sectors to witness the digital payments revolution in the region. 

The report added that the UAE is setting the standard for digital banking in the area and is rapidly growing into a significant global fintech hub thanks to supporting government policy. Growing collaborations between banks and fintech firms will probably spur new product development and make it simpler for users to accept new fintech solutions, particularly those for digital payments.

However, “for digital payments to prosper, the backbone is trust. Without trust, you will not have the advent of any industry.”