UAE Advances Towards a Cashless Economy Amid Persistent Cash Usage
Cash usage is still prevalent in some categories in the United Arab Emirates, despite notable progress in digital payments. In the UAE, cash is still used in about 23% of consumer transactions, according to Visa’s second edition of the Where Cash Hides study.
This study underscores key motivators behind cash reliance while highlighting avenues for accelerating financial inclusion and digitizing the payment ecosystem.
The UAE has made strides in adopting digital payments, driven by initiatives such as Dubai’s Cashless Strategy, which targets 90% digital transactions by 2026. Yet, traditional cash remains a preferred method, especially in peer-to-peer (P2P) transactions like tipping, money exchanges among friends and family, and everyday expenses.
Persistent Cash Usage
While overall reliance on cash is decreasing, certain transactions still see significant cash usage. For instance:
- Peer-to-Peer Transactions: Despite a decline from 43% in 2023, a noteworthy 33% of UAE customers still do P2P transactions using cash. This includes money transfers between friends and relatives (39%) and tipping (51%).
Spending on a daily basis: Offline taxis (32%) and farmers markets (44%) continue to see high cash usage rates. Nevertheless, the latter saw a notable decline from 46% in 2023.
Cash usage is typically low in spite of this. Sixty-one percent said that only one or two of their ten most recent transactions were in cash. Just 3% of respondents, however, stated that they only ever used cash for purchases.
Motivators for Cash Preference
The two most important elements for P2P transactions are widespread acceptability (20%) and habit (23%).
Cash use for daily expenses is driven by acceptance (23%) and quickness (24%).
These motivators highlight the need for additional information and assurance on the timeliness, security, and acceptability of digital payment methods.
Opportunities to Accelerate Digital Payments
Visa’s Vice President and Country Manager for the United Arab Emirates, Salima Gutieva, highlighted the unrealized potential for improving the digital payment ecosystem. “Even though digital usage has advanced considerably, cash is still used in 23% of transactions. This offers a chance to promote financial inclusion and the UAE’s cashless policy,” she said.
To address these gaps, Visa is championing solutions like:
- Visa Direct: A streamlined option for P2P payments, tips, remittances, and other disbursements.
- Click to Pay: Enhancing the online checkout experience for consumers and businesses.
- Tap to Phone:A cost-effective solution that makes it easy for freelancers, small and medium-sized enterprises, and cab drivers to take card payments.
Adoption will be accelerated by promoting contactless and mobile payment options and educating consumers about their advantages. This entails increasing acceptability among the underbanked and unbanked populations as well as fostering confidence in the security of digital payments.
Signs of Progress
The research revealed declines in cash usage for certain categories, reflecting positive shifts toward digital payment methods:
- International Money Transfers: Exchange-house usage faell from 40 percent in 2023 to 27 percent.
Rent Payments: From 25% to 16%, cash was used less frequently.
Offline Taxis: As digital alternatives were more widely used, cash usage decreased from 46% to 32%. UAE’s Transition to Cashless
According to the findings, stakeholders should prioritize lowering obstacles to the adoption of digital payments while simultaneously attending to the real-world requirements of both consumers and companies. The United Arab Emirates is in a strong position to lead the world in digital payments and pave the road for a cashless future through creative solutions, strategic alliances, and consumer education.
As the UAE advances its cashless strategy, the potential to transform P2P transactions and everyday spending into entirely digital experiences grows, making payments faster, more secure, and inclusive for all.