UAE SMEs Must Embrace These Four Payment Trends for Future Success Whether we are looking at digital wallets or AI-powered fraud detection, technological advancements are swiftly reshaping the world of payments, and those that embrace these new technologies with flexibility will be the winners of tomorrow.

As the United Arab Emirates continues its digital transformation, businesses – especially small and medium enterprises (SMEs) – have exceptional opportunities for growth. For example, a recent Visa study found that over 70% of small businesses in the UAE see increased revenue and traffic after adopting digital payments.

Given that SMEs are the largest employers in the UAE, accounting for 86% of private-sector jobs and contributing to 40% of the country's GDP, the government has prioritized their development through various initiatives, including publishing locally tailored research aimed to equip SMEs with practical market insights.

To support these efforts, Amazon Payment Services partnered with Davies Hickman earlier this year to publish a report which explores "Leading Trends in Digital Payments" in the Middle East and North Africa (MENA) region. The report, based on a survey of over 100 payment industry executives from the UAE, Saudi Arabia, and Egypt, explores key trends and their implications for businesses, including SMEs.

In this article, I will summarize the four key payment trends outlined in the report that SMEs across the region must embrace to thrive in today's evolving digital landscape.

Omni-pay advances

The first payment trend is the rise in omni-pay – in other words, the fragmentation of payment methods. We are seeing more and more businesses opting to offer multiple payment choices across different points of sale and media including apps, social media commerce and more.

This trend is driven by innovation from fintech companies, financial institutions and payment service providers who are offering alternative payment options such as open banking, stable coins, account-to-account payments, Buy Now, Pay Later, and Central Bank Digital Currencies.

While different payment methods are at various stages of acceptance and maturity, the trend towards greater diversity gives UAE SMEs and other businesses their choice of payment method based on their unique requirements. Businesses in the region are taking advantage of these emerging payment methods, with 86% of executives in Amazon Payment Services' research agreeing that they try to introduce new ways of making payments as soon as they become available.

Another report found that small businesses that provide multiple payment methods enjoy a revenue boost of almost 30%, highlighting the tangible positive results associated with embracing the omni-payment model.

Related: Infographic: The Adoption Of Digital Payments In Saudi Arabia

Enhancing customer experience

However, diverse payment methods alone are not enough. SMEs must look at harnessing better payment interactions overall for their customers – reviewing payment experiences from the customer's point of view to identify and eliminate pain points, whilst respecting local regulations.

The priority is to make payments faster and easier, with one of the key enablers being the growing use of digital wallets. Easier payment experiences on apps, through social media, virtual reality and other channels are also on the agenda.

Eighty-one percent of executives in the Amazon Payment Services research say improved and faster payment experiences would increase their revenues, underlining the business benefit of this trend. One reason for this is that customers are often busy and time-poor. If the transaction takes too much time, they may stop short of completing their purchase and abandon their shopping basket, highlighting the importance of seamless payment experiences.

Increased revenue due to more seamless payments enables businesses to increase cash on hand, which is particularly important for SMEs which may struggle with cashflow. This improved liquidity allows SMEs to reinvest in growth opportunities, manage operational expenses more efficiently, and build financial resilience.

Prioritizing payment security

The use of design and technology to improve the speed, reliability and utility of payments is certainly a key foundation of the future of payments, but first and foremost, earning trust is reliant on payment safety. The executives in the Amazon Payment Services research are clear that new ways of paying will not find any momentum unless customers are certain that adequate payment security is in place.

In fact, sixty-eight percent of businesses surveyed for the report say that earning customer trust is their most important driver for the deployment of new payment methods. On the customer front, a separate survey found that 84% of consumers in the UAE consider security as their top reason for paying online rather than in cash.

Robust payment security is particularly important to SMEs, who are often targeted by bad actors and may have limited resources to dedicate to building their cyber defenses. Almost 43% of cyberattacks target small businesses, and worryingly, only 14% of SMEs are prepared to face such attacks, according to research by Accenture.

Taking proactive measures to secure payments end-to-end goes a long way in preventing cyber breaches. Additionally, features that are part of payment methods including digital wallets, open banking and account-to-account payments can help to improve payment security, such as biometric authentication and QR scanning.

Leveraging Artificial Intelligence (AI)

Finally, SMEs and other businesses in UAE must review the role of artificial intelligence to make their payment systems more efficient and personalized.

AI has been used for many years, but since 2022 and the emergence of generative AI solutions, adoption across businesses has quickened. When it comes to payments, over half of the executives in Amazon Payment Services' research think AI will improve effectiveness of payment methods in the next two years.

For SMEs, applications of AI in payments have great potential to save time and money by automating recurring processes and detecting issues such as duplicate payments, freeing up limited human resources to focus on higher value work.

There are also opportunities to leverage AI combined with customer data to improve personalization in payment services. Be it through product recommendations, offering the right payment option or faster authentication, AI can support the desire of customers for a hyper-convenient payment experience.

SMEs in the UAE would do well to examine and action these top trends, because they not only offer a comprehensive roadmap for navigating the complexities of digital payments, but also present a unique opportunity for companies to stay ahead of the curve amid the frenetic developments in this landscape. Whether we are looking at digital wallets or AI-powered fraud detection, technological advancements are swiftly reshaping the world of payments, and those that embrace these new technologies with flexibility will be the winners of tomorrow.

Related: How SMEs Are Driving A Fintech Revolution Across The MENA Region