E-commerce payments, which are growing at a rapid pace in recent years, are set to grow at a compound annual growth rate (CAGR) of 19.1% from AED31.5bn ($8.6bn) in 2018 to AED46.3bn ($12.6bn) in 2022, says GlobalData, a leading data and analytics company.

GlobalData’s latest report, ‘Payments Landscape in the UAE: Opportunities and Risks to 2022’, states that with rising Internet penetration, increased smartphone usage and a growing consumer preference for online shopping, the overall e-commerce payments value doubled between 2014 and 2018.

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Nikhil Reddy, Payments Analyst at GlobalData, comments: “While traditional payment instruments such as cards, cash and bank transfers are widely used for online purchases, consumer preference for alternative payments is also on rise.”

GlobalData’s 2018 Consumer Payments Insight Survey reveals that there is a growing inclination for faster, secure and convenient payment options, especially among millennials.

All major international services, including PayPal, Visa Checkout, and Masterpass, are now increasingly being used for making online payments. PayPal alone accounted for a 6.4% share in terms of e-commerce transaction value in 2018.

The Emirati government has also made efforts to develop the country’s e-commerce market, particularly by implementing free e-commerce trade zones. Dubai CommerCity, the first dedicated free zone in the entire Middle East and North Africa region, was set up in 2017. It offers companies a wide range of benefits, such as duty-free export and imports, access to cargo and logistics services, exemption from corporate taxes and full repatriation of capital and profits.

The underlying potential for online purchases, coupled with favorable government policies, has attracted a number of international brands to establish their online presence. The latest foray into the country was the launch of online shops by international retailers Marks & Spencer and H&M in 2018. The rise in e-commerce activities is likely to drive overall electronic payments in the country.

Reddy concludes: “The government’s e-commerce policies, coupled with rising consumer confidence in online purchases and the availability of convenient payment solutions, are expected to further drive e-commerce payments market in the UAE.”