Mastercard, UAE Exchange: Building A Cashless Middle East

Carrying wads of hard currency in an overstuffed wallet has ceased to be fashionable, thanks to the advent and proliferation of plastic money and cashless digital payment mechanisms. In countries like the United Arab Emirates (UAE), which ranks seventh in a UN list on migrant populations, with over 8 million working under its pellucid blue skies, digital transformation is happening at an amazing speed and on a massive scale.

Cashless payments are a priority for the government of the UAE in its Vision 2021 roadmap. Achievements on this front are manifest in the monthly electronic payments to over 4.7 million migrant workers, mostly blue collar, as salary disbursements. These ePayments are also linked to a successful Wages Protection System (WPS), ensuring workers are paid regularly, leaving no loophole for companies to err on a trilateral labor contract signed between the employer, employee and the government. It is not just being cashless for the sake of the fad; it takes care of a critical social dimension of ensuring the welfare of workers too.

“There isn’t a more fertile ground for digital transformation than the UAE,” according to Promoth Manghat, CEO, UAE Exchange.

The UAE has one of the world’s highest internet and mobile penetrations. Out of the mobile subscribers, 74 percent are smartphone users, and as the growth in mobile phones testifies — a whopping 228.3 per 100 people, as per official statistics for 2017 — a subscriber context to catalyze digital payments is already vibrant. The country is a melting pot of different nationalities from across the world, with a predominant share of the migrant population from developing countries where cash still reigns supreme.

According to Manghat, the digital payments infrastructure is advanced in the developed world, and to go cashless is inbred in the population psyche. This may not be the case in developing countries, and there needs to be a hybrid payments ecosystem, which will help level up the payment industry initially.

“Digital payments have not been quick enough to gain traction in developing countries, where traditional payment methods are still getting the job done. It’s a case of “good enough” being the enemy of “great.” However, it’s a matter of time for digital transformation to envelope the financial services industry rapidly in these countries as well, with people increasingly opting for the cashless experience,” Manghat said.

According to him, the UAE has made significant strides in adopting digital payments.

“The reasons are evident enough — a demography tilted toward the young, who are digitally savvy. Plus a visionary government which is empowering the shift to the digital,” said Manghat, adding that “the regulatory framework continues to evolve to facilitate the robust adoption of safe, secure and user-centric digital payments.”

He pointed to initiatives like Smart Dubai and Dubai Blockchain Strategy, which lend credence to the UAE’s commitment to making the digital economy a plausible reality. These government initiatives have also inspired the private sector to follow suit.

According to Girish Nanda, GM, UAE & Oman, Mastercard, digital has been a key priority for Mastercard, with the introduction of its contactless payment rollout, which included the launch of global digital payment service, Masterpass, or its recent provision enabling customers to use Apple Pay and Samsung Pay on its cards to reinforce the cashless ecosystem.

“Our long-standing partnership with the UAE Exchange is an excellent example of our commitment to our shared cashless agenda,” Nanda said. UAE Exchange’s Smart Pay Payroll Card for salary disbursements and the Gocash multi-currency prepaid card for online spend and travel expenses are both powered by Mastercard.

Manghat said the Smart Pay Payroll Cards give employers a digital gateway to pay employees who don’t have a bank account. Smart Pay is a digital alternative to a traditional bank account, particularly for salary receipts, but which can be opened and maintained without the traditional requirements most banks in the Gulf region stipulate.

Similarly, the UAE being an expatriate hub with travel requirements rampant, Gocash is just the answer to the market’s needs, according to Manghat. Users of the Mastercard-powered card have a choice to load up to six different currencies from a bouquet of over 20, providing a boon of convenience to travelers.

Both Nanda and Manghat said these cards have aided the digital shift for a large number of users. “As for Mastercard, these initiatives were the biggest challenge, which we weathered successfully, and the biggest opportunity,” Nanda said.

Manghat noted there are two driving factors behind the adoption of digital payments — evolving technology and changing consumer expectations. Both reinforce one other. The proliferation of mobile devices, especially smartphones, has profoundly democratized access to payments and financial services without any constraints on location.

Today for businesses on any digital evolution scale, mobile-first is almost a sacred mantra of sorts while they put together strategic expansion plans. Mobile connects merchants to consumers; it’s shifted the dynamics of digital empowerment and payment ecosystems. In some cases — and quite dramatically, like in countries of the African continent — it has become the primary payment conduit.

The evolving digital paradigms will also benefit from the application of frontier technologies like artificial intelligence (AI), Big Data and blockchain, especially as regulatory and compliance pressures, including PSD2, AML (anti-money laundering) and KYC (Know Your Customer), among others, are taken into account.

“Customers have grown more discerning as well. They have myriad options; they are also equipped with tools to compare and make educated choices without any human intervention. Simply put, it matters these days if you are in the consideration set or not,” said Manghat, almost sounding a warning to businesses who are tardy and behind in knowing customer expectations.

Customization, he said, is a top priority. “Tweaking customer interfaces — online as well as offline — to make it more personal will be [the] key to success. A huge combination of intuitive technologies will bring the flexibility — whether to do mass customization or in being individually bespoke,” Manghat said.

According to Nanda of Mastercard, the UAE is fast emerging as the FinTech hub of the Middle East. That necessitates market leaders like UAE Exchange and Mastercard to collaborate with new players in the emerging ecosystem.

“Mastercard believes that to create a more inclusive economy, partnerships between the private and public sectors have to be enhanced further,” Nanda said, adding that “all stakeholders — from governments, merchants, to any other businesses — have a part to play in developing a ‘world beyond cash,’ where even the unbanked population can benefit from being part of the formal financial mainstream.”

He said Mastercard has been an active partner in fostering public-private partnerships in line with the strategic direction of many governments in the Middle East: to promote cashless transactions and an inclusive economic vision.

“Innovation is key to growth. Governments, leaders and regulatory agencies in the region recognize this, and they do look forward to players like the UAE Exchange or Mastercard to bring innovative technologies that will support the advancement of sustainable and diversified economies,” Nanda said.

Manghat said that, in line with the digital demands of the time, UAE Exchange is working on multiple products to support the unbanked and the low-income population across the globe to easily access convenient payment solutions.

“Our partnerships with cutting-edge technology innovators like Ripple, along with our innovative products such as the Smart Pay Payroll Card, underscore our commitment to a digital vision,” he said.