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Tech to fuel UAE payments sector growth to $19.8 billion by 2027

As of 2022, cash transactions still dominated the payment landscape in the UAE, accounting for over 64% of the total payments made in the country.

Tech to fuel UAE payments sector growth to $19.8 billion by 2027
[Source photo: Anvita Gupta/Fast Company Middle East]

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The UAE payments industry is anticipated to experience remarkable growth, with total revenue expected to surge by 55% to reach an impressive $19.8 billion in the next five years.

This growth is propelled by a surge in digital transactions and technological advancements driven by the emergence of Generative AI (GenAI).

Analysts at Boston Consulting Group (BCG) highlight the UAE’s distinctive position as a global hub for innovation, where payment providers are poised to “redefine their roles and services” amidst the dynamic evolution of the global payments ecosystem.

BCG’s comprehensive analysis predicts a compound annual growth rate (CAGR) of 3.6% for the UAE payments sector in the next five years (2023-2027), driving the revenue pool to a noteworthy $19.8 billion.

The anticipated growth trajectory exceeds the global payments industry’s projected compound annual growth rate (CAGR) of 6.2%, highlighting the UAE’s position in this rapidly evolving landscape.

GlobalData confirms this growth trajectory, projecting a CAGR of over 8.0% for the UAE cards and payments market size between 2022 and 2026, reaching a staggering $119.8 billion in 2022.

Although cash currently dominates the payment landscape, constituting over 64% of overall transaction volume in 2022, there is a swift shift towards digital payment solutions.

Mohammad Khan, Managing Director & Partner at BCG, highlights the UAE’s unique position in the payments landscape. “Despite slower global growth trends, the UAE payments revenue pool is expected to continue expanding in the coming years,” he said. “This is largely due to the UAE’s pioneering role in adopting cutting-edge technologies, including Generative AI, which are being integrated across organizational processes.”

Despite global challenges such as economic instability and the pandemic, the UAE payments industry has exhibited resilience, achieving a compound annual growth rate (CAGR) of 9.7% between 2018 and 2022, reaching $12.8 billion in revenue. This growth is attributed to a transition from cash to non-cash transactions and is projected to persist at a CAGR of 10.9% from 2023 to 2027.

The report says the UAE’s payments industry’s significant transformation can be attributed to four key factors: operational resilience, Generative AI, risk management and compliance, and mergers and acquisitions.

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