Dr. Saeeda Jaffar, Senior Vice President and Group Country Manager for GCC at Visa

October 2022

6 - 7 Minutes

Destination Digital: Spotlight on the Gulf Cooperation Council’s Post-Pandemic Digitization

With tourism bouncing back, consumers transitioning to cashless and a wider shift to digital, the Gulf Cooperation Council (GCC) is set to outperform the rest of the world in 2023. Dr. Saeeda Jaffar, Senior Vice President and Group Country Manager for Visa GCC, explains the trends and key takeaways.

Even as the global economy slows from its immediate post-COVID recovery, the Gulf Cooperation Council (GCC) remains in expansion mode this year, after growing by 2.9 percent in 2021.¹ And, supported by regional factors including consumers’ uptake of cashless payments, a recovery in travel and investment in digital transformation, the economies of the GCC – the United Arab Emirates (UAE), Kingdom of Saudi Arabia (KSA), Bahrain, Oman, Qatar, and Kuwait – are set to outperform the rest of the world in 2023.

While the pandemic saw the region’s economies contract in 2020, it accelerated key payments trends: the move away from cash continues at pace, with cash use falling from 62 percent of payment volumes in 2019 to 40 percent in 2022.² In tandem, payment volumes have now exceeded their pre-pandemic level for Visa, with an 89 percent compound annual growth rate (CAGR) seen in Visa Direct (P2P, or peer to peer) transactions specifically, over 2019-22.³ With the easing of travel restrictions, cross-border tourism and related spending are on the rise; while, with the sustained shift to digital payments, payment providers face both opportunities and challenges in providing safe, seamless options.

So, how exactly are these trends playing out – and where will it all go next?

How the GCC Region is Going Digital
In recent years, the move away from cash in the GCC has accelerated. With less than 50 percent of overall payment volumes now transacted in cash in the wider CEMEA (Central Europe, Middle East and Africa) region, the cashless transition in the GCC is expected to pick up pace in the next few years.⁴

As money evolves, it is important to remember that this must be a journey for everyone, says Dr. Saeeda Jaffar, Senior Vice President and Group Country Manager for Visa GCC: “As a business our purpose is to uplift everyone, everywhere by being the best way to pay and be paid and that translates as a collective challenge. As we engage on getting to our digital destination we need to innovate to include and grow as we drive more access for the communities we serve.”

The Travel Bounceback
After international travel began to recover in autumn 2020 and has since gathered pace, cross-border travel and spend have been increasing rapidly in the GCC. The share of consumers travelling has increased to above pre-pandemic levels in KSA and Qatar (though spending per person on travel is still below pre-pandemic levels).⁵ Tied to this cross-border spend, retail tourism – where tourists visit primarily to shop – is staging a strong comeback, with in-person spending by international tourists now comfortably above its 2019 level.⁶

To make the most of the return of travel, banks need to be ready to identify emerging trends, helping them to stay relevant to consumers with targeted travel-related incentives and products.

Why Including SMBs is Key
GCC governments are ready to benefit from the economic opportunity around including small and medium size businesses (SMBs) digitally – that was a key finding of the GCC Small Business Digital Inclusion Survey¹¹, covering more than 700 SMBs in the region.
How is this being achieved? Governments have developed national digital strategies, linking them to practical activities, to promote the digitization of SMBs. Progress in this area is visible: the survey found that an overwhelming majority (80 percent) of the GCCs’ medium-sized SMBs have now digitized payments by using online stores and issuing digital invoices.

What that signals to the wider sector is that, to service today’s SMBs and micro businesses, ﬁnancial institutions need to look beyond traditional banking products to support their end-to-end business growth journeys. Specifically, banks should focus on developing defined propositions targeted at SMBs and business banking.

The Acceleration of Digitisation
The explosive growth in ecommerce and contactless payments in the GCC show consumers have clearly embraced digital payments for the long term, driven by their convenience, reliability and security. Ecommerce spending, both domestic and cross-border, has remained strong and stable relative to 2019 – up 36 percent CAGR over the 2019 to 2022 period⁷ – well above pre-COVID trends even as the effects of the pandemic fade. Though all forms of digital payment are growing strongly, in-app payments and mobile commerce are outperforming the wider market: for instance, in KSA, mobile wallet users are expected to grow by 8.5 million from 2020 to 2025. In the UAE, which has a population of less than 10 million, mobile wallet users are expected to grow by 2.1 million from 2020 to 2025.⁸

GCC consumers show an appetite for further innovation: to take BNPL (buy now pay later) payments, which are evolving to be a feature of every Visa card both driven by corporate innovation and consumer demand. A recent survey in the UAE found 75 percent of consumers were familiar with BNPL and, in a mark of its popularity, 65 percent would likely switch stores or online sites or apps to those that offered a BNPL option.⁹ Consumers in the region also show enthusiasm for another newer form of payment, crypto, which is popular as an investment rather than a broad-based payment method: with a sector hub emerging in Dubai where crypto firms Binance, Bybit, FTX, and Crypto.com are creating regional HQs.¹⁰

Looking forward, the focus for merchants will need to be ensuring an enhanced consumer experience and seamless digital payments, to harness this growth in online transactions.

Sophisticated Security
As consumer behavior changes, external threats continue to evolve also. That means now, more than ever before, those involved in payments need to work together on a global scale to tackle increasingly sophisticated fraudsters and cyber criminals. The 2022 findings from Visa’s annual Stay Secure Study in three GCC countries – UAE, KSA and Qatar – revealed one in three consumers surveyed struggle with identifying a scam. Encouragingly, consumers want to know more: 85 percent of those in UAE want to know how ecommerce sites will protect personal data before paying online, while about three quarters of consumers surveyed stated that they would like to know how security technology works to be able to trust digital payment methods.

The Need for Agility
All this makes clear the scale and pace of change, which will continue to accelerate in the region, aided by the growth and diversity of digital payment products across sectors and businesses. In response, the payments sector must be agile to capture the opportunities the evolution of money offers, and also respond to the challenges it presents.

As Saeeda says: “In the GCC, we at Visa are committed to joining with our clients to focus on our common priority – the acceleration of the migration to digital payments. Money is changing – and together, we have a role to play not just in adapting but in defining the nature and capability of what it can do. By making our fundamental priority to continuously strive to improve the customer experience, we can capture emerging opportunities and offer seamless, secure and flexible payments for all. No one can predict the future, but we can prepare for it - and one thing is for certain: the future is digital.”

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All brand names, logos and/or trademarks are the property of their respective owners, are used for identification purposes only, and do not necessarily imply product endorsement or affiliation with Visa.

¹IHS Markit, Visa Business and Economics Insights, Oxford Economics. Weighted average of key economies in the GCC (KSA, UAE and Qatar, which account for nearly 84 percent of GCC’s GDP).
²Oxford Economics, Visa projections
³Visa Net data (Settlement and Collection only)
⁴Oxford Economics, Visa Projections
⁵Visa Business and Economic Insights analysis of VisaNet data.
⁶Cross-border travel spending is defined as card-present purchase volume on Visa consumer credit and debit credentials outside the markets where they were issued. Cross-border visits is proxied by the use of Visa consumer cards cross-border in country, Aggregates exclude Russia, Ukraine and Belarus. Sources: Visa Business and Economic Insights, VisaNet.
⁷VisaNet data (Domestic and International) Settlement; Visa Finance.
⁸Boku – 2021 mobile wallet report.
⁹Visa Stay Secure Study 2022
¹⁰Reuters, UAE crypto push see Bybit, Crypto.com announce offices, 2022: UAE crypto push sees Bybit, Crypto.com announce Dubai offices | Reuters
¹¹GCC Small Business Digital Inclusion Survey, commissioned by Visa and conducted by Nextrade Group, covering more than 700 SMBs in the region.

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Destination Digital: Spotlight on the Gulf Cooperation Council’s Post-Pandemic Digitization

With tourism bouncing back, consumers transitioning to cashless and a wider shift to digital, the Gulf Cooperation Council (GCC) is set to outperform the rest of the world in 2023. Dr. Saeeda Jaffar, Senior Vice President and Group Country Manager for Visa GCC, explains the trends and key takeaways.

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