Mobile is King as Digital Payments Gain Ground in GCC

Between growing smartphone penetration, the proliferation of new FinTech solutions and a growing shift from cash to digital payments, the Gulf Cooperation Council (GCC) region has experienced a significant increase in digital payment volumes over the past two years.

Data published last week by the Central Bank of Bahrain (CBB) reveals that in 2021, the volume of digital payments in the country surged by nearly 50% year over year (YoY) to 125.5 million transactions. When it came to mobile wallet payments alone, the Middle Eastern country witnessed a yearly volume increase of 196% during that same period.

Meanwhile, at the recently ended Seamless Saudi Arabia event in Riyadh, a presentation by Amazon Payment Services highlighted that 2021 was the first year that electronic payments eclipsed cash transactions in the Kingdom to represent 62% of payments across all sectors.

Not to be confused with Amazon Pay, Amazon Payment Services is the eCommerce firm’s payment gateway for the Middle East and North Africa (MENA) region. In addition to Saudi Arabia, the subsidiary has operations in the United Arab Emirates (UAE), Egypt, Jordan, Lebanon, Qatar, Kuwait and Oman.

Related: B2B eCommerce Firm Tradeling Teams With Amazon Payment Services

Speaking at the event, Amazon Payment Services Head of Business Development Mohamed Imtiyaz highlighted the important place of eCommerce and digital native payment methods in the Saudi economy.

“Online marketplaces are increasingly looking for payment service providers which provide a seamless payment infrastructure in addition to offering added value by increasing checkout conversion with a wider choice of affordable payment options like BNPL [buy now, pay later] and installments,” he said.

The company also took the opportunity to show off its own BNPL solution, Amazon Payment Services Installments, which is currently live in Saudi Arabia, Egypt and the UAE.

Amazon’s efforts to increase the payment options MENA-based merchants can offer their customers reflect the region’s booming eCommerce sector and the increasingly important role digital native payments play across its economies.

Catching up With the UAE’s Mobile Shoppers

According to a recent PYMNTS and Cybersource study, the “Global Digital Shopping Index,” Emirati consumers are among the most digitally savvy in the world.

But the rise of digital payments in countries that have traditionally relied heavily on cash also indicates how Gulf countries like Bahrain and Saudi Arabia could now rival the sophisticated commercial ecosystem in neighboring UAE.

Get the report: 2022 Global Digital Shopping Index: UAE Edition

Per the report, UAE consumers were found to be especially prone to using their smartphones to enhance their shopping experience, whether online or in-store. In fact, compared to the other 5 countries studied, across almost all categories, shoppers in the UAE were found to be the most likely to use their smartphones during their shopping journeys.

Consumers in the country are also the most likely of those studied to have completed their most recent purchase entirely through their smartphones, as 32% of those surveyed responded that this was the case.

Read more: UAE Shoppers Were Most Active Online and In-Store Smartphone Users

Overall, with this highly digitized retail environment, the UAE presents a model for other countries in the region that are currently accelerating the pace of their digital transformation. And in light of the GCC’s drive toward greater economic integration and shared retail traditions, the UAE’s preference for smartphone-assisted shopping could likely be repeated in neighboring counties.

Certainly in Bahrain, the CBBs recent report on the digital payments landscape highlights a massive growth in the use of digital wallets. For example, the government-commissioned payment app BenefitPay accounted for 209 million payments in 2021 alone, helping to contribute toward the 65.6% of all point-of-sale transactions in the country that were contactless.

And according to Saudi Payments, the volume of mobile payments in the country nearly tripled last year, accounting for 35% of all transactions.

So, as other GCC nations look on, merchants and consumers in Saudi Arabia, Bahrain and the UAE reveal the central role that smartphones can play in the digital economy.

For all PYMNTS EMEA coverage, subscribe to the daily EMEA Newsletter.