BCG’s Comprehensive Study Foresees UAE Payments Sector Revenue Growth

In the next five years (2023-2027), the UAE payments industry is expected to experience a substantial increase in overall revenue growth to a compound annual growth rate (CAGR) of 3.6 per cent, pushing the revenue pool to $19.8 billion, according to a comprehensive analysis by the Boston Consulting Group.

This significant surge is attributed to the growing prevalence of digital transactions and technological advancements driven by GenAI. According to analysts at Boston Consulting Group, this presents a unique opportunity for UAE-based payment providers to redefine their roles and services amidst the ongoing changes in the global payments ecosystem.

The global payment revenues, on the other hand, are projected to grow by $2.2 trillion by 2027 at a CAGR of 6.2 per cent. The UAE cards and payments market size was valued at $119.8 billion in 2022 and is expected to achieve a CAGR of more than 8.0 per cent during 2022-2026, as per GlobalData.

Mohammad Khan, the managing director & partner at BCG, stated that the UAE payments industry is expected to continue growing in the years ahead, emphasizing the country’s early adoption of technological advances powered by GenAI. He emphasized that this evolution will improve customer pathways, offer specialized solutions, and ultimately lead to heightened service quality and profit growth.

The payments landscape in the UAE is currently dominated by cash, accounting for more than 64 per cent of overall payment transaction volume in 2022. However, the UAE’s shift from cash to digital transactions is forecasted to lead to continuous growth in the coming years, driven by technological advancements and supportive government initiatives.

The report also highlights that the UAE payments industry is grappling with multiple disruptions, from technological advancements to new market entrants, including the rapid growth of real-time payments and the commoditization of basic payment processing. BCG analysts noted that over 5,000 fintechs globally are making their mark in the payments arena, collectively accounting for a significant portion of the industry’s revenue.

The strategic direction of the UAE’s payments industry is being shaped by four pivotal areas, including operational resilience, Generative AI, risk management and compliance, and mergers and acquisitions. It is essential for UAE-based companies to strategize effectively to maintain their competitive edge amidst these ongoing industry changes.

Lukasz Rey, the managing director and partner at BCG, highlighted the growing significance of GenAI in the payments sector, particularly in enhancing compliance measures, and emphasized the value of smart partnering and mergers and acquisitions in building capabilities in this domain.

In conclusion, the comprehensive analysis by the Boston Consulting Group underscores the expected growth and transformative changes in the UAE payments sector, positioning UAE-based payment providers to leverage technological advancements and redefine their roles and services to maintain competitive advantage.