Contactless transactions set to double digital payments business

The COVID-19 pandemic is encouraging businesses to deploy innovative technologies that will boost contactless transactions, set to double digital payments business from $4.4 trillion in 2020 to $8.26 trillion in 2024, according to research by Statista, a global market intelligence provider.

Of this $2.92 trillion is in digital commerce and $1.47 trillion worth of transactions will take place in the mobile point-of-sale (POS) payment channels this year. In 2024, the digital commerce sale value will exceed $4.11 trillion, while MPOS payment will jump to $4.15 trillion.

In the MPOS payments segment, the number of users is expected to amount to 1.74 billion by 2024. The number of users of the digital commerce channels will exceed 4.63 billion, the report says.

With contactless transactions set to double digital payments business, retailers are shifting from brick-and-mortar to the digital space faster following the COVID-19 pandemic, officials and experts said at a virtual roundtable on Intelligent Retail Marketing organised by RetailME, the region’s only dedicated market intelligence provider in the retail sector.

According to Visa’s ‘Back to Business’ study, 92% of the businesses surveyed in the UAE are shifting their business online or increasing its online presence, compared to 74% globally. “More than 90% of the UAE consumers say they would switch to a new store that accepted contactless payments, compared to 63% globally,” Kalika Tripathi, head of marketing for the MENA region, Visa, told audiences at the webinar.

“In fact, almost three in four or 72% of the UAE consumers surveyed wouldn’t shop at a store that only offers payment methods that require contact with a cashier or other shared device, compared to 48% globally. More than 90% of the UAE consumers surveyed have made changes to the way they pay for items due to COVID-19, primarily shopping only online when possible (59%), using contactless payment (52%) and not using cash as much (40%), compared to 78% globally.”

Consumer behaviour in the GCC countries has seen a drastic shift towards online payment following the outbreak of the COVID-19 pandemic.

“This says a lot about the consumer mindset. Digital payment experiences – especially contactless and e-commerce – are what consumers need and want right now. And as they experience the convenience and security of digital payments, it will become the norm,” Tripathi added. “That is why it is crucial for businesses in the region, particularly those that still have cash-on-delivery as the primary mode of payment, to understand this shift in consumer expectations and plan accordingly. It is not only critical for businesses to survive COVID-19 but also to thrive in the future.”

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Justina Eitzinger, COO, Images RetailME and host of the Webinar, said, “In 2019, retail e-commerce sales worldwide amounted to $3.53 trillion and e-retail revenues are projected to grow to $6.54 trillion in 2022. Online shopping is one of the most popular online activities worldwide.”

“Through a series of webinars, we are trying to reflect on the changing retail landscape of the Middle East and help the retailers to develop the best strategy to navigate out of the crisis. RetailME has helped the retail industry stay well-informed, up to date and learn from success stories. We have the maximum reach amongst the who’s who of retail in the region. RetailME is very respected and vouched for in the industry. Our coverage spans from the biggest retail entrepreneurs to the budding start-ups. RetailME through its digital, print and event platforms deliberates, connects and shares knowledge on A to Z in retail!”

During COVID-19 many consumers in the Arab world and Africa are choosing online stores for their essentials such as groceries and pharmacy items for the first time, Visa stated. Two-thirds of UAE and Saudi consumers and 71% Kenyan consumers surveyed say that COVID-19 has led to their first online grocery shopping. The comparable number for first-time online buyers from pharmacies stands at 70% and 69% in Kenya.

Echoing the same, Candice D’ Cruz, vice president of luxury brand management and marketing, Europe, Middle East and Africa at Marriott International, said, “We are in the service industry and everything that we do are people-oriented. However, we are also looking at contactless technologies. More than 3,300 hotels worldwide are now equipped with Mobile Keys – which enables guests to access services through the mobile app. This is the new normal.”

Data analytics

Businesses have started using customer data analytics to strengthen their engagement with them, officials say.

“Data is at the centre of what we do. Data analytics has become very crucial in our business these days. Six years ago, we launched a massive data mining window called MLive to understand customers’ travel and accommodation behaviour that helped us to upgrade our loyalty programmes.”

Marriott International, which acquired Starwood Hotels and Resorts, has a worldwide customer database of 500 million.

Maria Gedeon, marketing director, VOX Cinemas and Majid Al Futtaim Leisure and Entertainment, observed, “People and data are the two essential pillars of business strategy. We have 10 million unique customers in the region, including 1.6 million SHARE rewards members. Using customer data for business intelligence is crucial for us to understand their tastes, their habits in order to offer the best movies.”

“Despite COVID-19 that forced us to close our operations, we increased engagement on our social media platforms by up to 250% to remain in touch with them. More than 30% of our customers are SHARE rewards members.”

Physical touch and feel

Despite the digitisation drive, the luxury market will continue to rely on physical customer engagement, believes Sahar Vakil, head of brand development at Marina Home.

“Regardless of the COVID-19 crisis, customers need to touch and feel the products. We have witnessed the need for physical shopping and entertainment among the local communities. We have seen a greater appetite for community collaboration. We appointed community ambassadors as part of our community engagement and through them we were able to engage with the customers better, especially with the Emirati customers. In addition to technology deployment for customer data analytics, our strategy now is to create more touchpoints for customers to touch and feel products. This helps them to buy.”

More than 6,000 new homes will be delivered in Dubai this year, which will drive sales in the home furnishing sector.

“The new homeowners will help our business to grow. However, they prefer to physically go and choose their home interiors and furnishings,” Vakil said.

Saudi Arabia’s retail landscape

The COVID-19 crisis has also pushed the retail landscape in Saudi Arabia to change quite fast. Most retailers have opened up digital channels to serve customers.

“We have witnessed a massive uptake in online business. Our cash-on-delivery is declining as more and more consumers are shifting online – primarily for health and safety reasons,” concluded Byron Koller, chief marketing officer, AYM and Danube Online.