Visa Study: Digital Payments Drive Growth for +70% of UAE Retailers 

The research collected insights from two categories of UAE-based merchants: those who have embraced digital payments for 1-4 years and retailers exclusively reliant on cash transactions. The survey encompassed various store types, including quick-service restaurants, small grocery stores, tailors, fashion/apparel outlets, and laundry services, spanning different business sizes categorized as nano (2 or fewer employees), micro (3-10 employees), and small (11-49 employees).

According to the study, among merchants accepting card payments, both digital transactions and cash collectively constitute 90% of the total payments received by surveyed small businesses, with digital payments representing the larger share.

Digital Payments: Catalyst for Business Expansion

Visa's study underscores the pivotal role of digital payments acceptance in propelling the growth of small enterprises, with 68% of surveyed merchants affirming that embracing card and mobile wallet payments is a strategic investment significantly contributing to their business expansion. Additionally, 67% of these merchants highlighted that the majority of their customers prefer making payments via card or mobile devices.

Despite acknowledging the associated costs of digital payment acceptance, 95% of merchants believe that the benefits derived from it either match or surpass these costs. Moreover, 68% of retailers accepting digital payments express confidence in the overall value of such transactions, with 63% expressing a strong intent to invest in advanced payment technologies in the future.

Challenges of Cash-Only Approaches

While cash transactions are often associated with convenience and easy refunds, more than a quarter of cash-only merchants report losing transactions due to customers not carrying cash. Consequently, nearly 40% of cash-only merchants plan to invest in digital payment technology soon to enhance the payment experience for consumers.

Approximately half of these merchants anticipate that adopting digital payment methods will boost both foot traffic and revenue. Additional benefits cited by merchants include expedited payment processing and checkout, which enhance their business appeal.

Salima Gutieva, Visa’s Vice President and Country Manager for the UAE, remarked, “As the UAE advances its digital commerce agenda, our 'Value of Acceptance' study underscores the transformative potential of digital payments for the retail sector. Embracing digital transactions not only aligns with the UAE’s vision of a cashless society but also unlocks substantial growth opportunities for small businesses and the broader economy.”

Gutieva further emphasized, “Beyond the advantages of security, speed, and convenience, digital payments offer invaluable data insights. With more consumers opting for digital transactions, this data can help merchants tailor communication, optimize offers, implement loyalty programs, and elevate the overall customer experience, thereby enhancing business profitability and efficiency.”

Merchant Expectations from Digital Payment Providers

Merchants already accepting digital payments anticipate a range of value-added services from their payment providers to enhance their payment infrastructure and customer offerings. Key expectations include online payment acceptance (49%), more secure and efficient B2B payments (48%), targeted communication of special offers and loyalty programs (43%), and mobile payment acceptance options (e.g., Visa’s Tap to Phone solution) (41%). Additionally, multi-currency processing (32%) and fraud detection and prevention (27%) were identified as areas where payment providers can further support local businesses.

About the Study

Visa commissioned 4SiGHT Research & Analytics to investigate the impact of digital payments on small retailers and assess their receptiveness to digital payment options among those currently reliant on cash-only transactions. Conducted in December 2023, the study involved face-to-face interviews with 250 nano, micro, and small retailers, with 46% accepting cash payments only and 54% accepting both cash and digital payments. The surveyed retailers were based in Abu Dhabi, Dubai, and Sharjah, representing a diverse mix of nationalities and genders reflective of the UAE population. Each interview lasted approximately 15 minutes.