More than US$10 billion was spent in the UAE over the internet last year with online transactions expected to nearly triple during the next four years. However, the region still faces issues with online payment adoption.
A new report by online payment provider Payfort, which focused on seven Arab countries, said that regional e-commerce grew by 23 per cent with the UAE representing one of the largest growth markets next to Saudi Arabia and Egypt. And thanks to Expo 2020, the UAE’s online transactions are expected to nearly triple to $27.13bn in the next four years.
“As competition grows and online consumers become more sophisticated, understanding the unique demographics and habits of Middle East consumers becomes all the more important for online businesses,” said Omar Soudodi, the managing director of Payfort.
Airlines and e-commerce propelled the UAE’s internet transactions, making up over 86 per cent of total transactions. But the strongest growth market is entertainment, so much so that the UAE had about 10 times the volume of transactions compared to Saudi Arabia, the second highest.
While the UAE continues to lead the region in terms of adoption with 71 per cent of the country shopping online, the region still lags however.
Online purchases are gaining greater acceptance across the region, but cash-on-delivery is still king in countries such as Egypt. “Despite the enormous growth in the number of consumers buying online, there are still many challenges for Middle East businesses,” said Mr Soudodi.
A fear of new technology and payment methods remain significant obstacles for consumer marketing in the region. On the flip side, customers that regularly use the internet for purchases are demanding greater services.
“The consumers that are paying online demand faster and easier checkouts, while simultaneously expecting increased security,” said Mr Soudodi.
“Rising expectations put a lot of pressure on merchants.”
Follow The National’s Business section on Twitter