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.