Retail Payment Systems
In the OIC Member Countries
87
4.8 United Arab Emirates
Highlights:
• The booming economy was aided by a number of factors, including strong foreign direct
investment; the United Arab Emirates continues to be seen as a safe haven for investors.
Strong economic growth helped to restore consumer confidence in the banking system,
which was lost during the economic downturn.
• Following the economic downturn in 2008, the financial sector in the United Arab Emirates
was the first to take a hit, and there was a huge exodus of expatriates and a collapse in
consumer confidence. Nowadays, banks work simultaneously to raise awareness of the
safety of using cards at PoS rather than solely for ATM withdrawal, which served to further
boost the number of cards in circulation.
• A rise in internet penetration over the later years of the review period and into 2014 saw a
rising number of consumers opting to shop online and through their mobile phones.
Increasingly westernised lifestyles gave rise to the need for convenience, which fuelled
online and mobile retailing.
Introduction
Over the past decade, the Emirati economy has shown significant growth, mostly due to high-
volume oil exports. The UAE’s dependence on oil, however, has left the economy vulnerable to
the 2008 global economic recession. That year, the GDP fell by 4.8%. The economy has since
recovered with a positive GDP growth in 2011 and 2012 of 4.2% and 4.4% respectively. The
slower paced growth of the economy has allowed for better control over inflation, which
dropped from 12.3% in 2008 to 1.6% in 2009. Inflation is expected to stay below 3% between
2013 and 2017.
In order to reduce the country’s dependence on oil, UAE authorities have tried to diversify
their economy by broadening horizons into areas such as finance, construction and tourism.
The United Arab Emirates’ GDP is expected to continue to grow at a rate between 3% and 4%
over the forecast period of 2013-2017, reaching US$433.4 billion by 2017. The UAE will
continue to be one of the most attractive and prosperous countries in the region up to 2017,
and will continue to serve as a hub for the rest of the Middle East and Northern Africa.
General Banking and Payment Landscape
As of 2005, the small UAE banking sector was served by 21 domestic and 25 foreign banks,
thus the UAE banking sector is quite fragmented. Banks incorporated in Abu Dhabi and Dubai
hold more than 90% of the total domestic assets, with this total being divided almost equally
between Abu Dhabi and Dubai banks.