The mobile wallets landscape is becoming increasingly interesting in the Middle East. A growing demand for mobile payments is driven by digital natives and recently, mobile wallets like Samsung Pay, and soon Apple Pay, started to hit the UAE's market too.
Beam Wallet was launched in the UAE back in 2012 and since then, we've experienced first hand what the reasons and barriers perceived by people are when using mobile wallets, as well as what the enabling factors for retailers could be to adopt mobile payments in-store.
Sharing some of the insights earned with Beam, Alejandro Carbon answered 6 key questions about adoption, benefits and myths related to mobile payments.
We would like to know how your experience has been so far and what your expectations are towards mobile wallets and mobile payments, in the comments below.
Why are mobile wallets growing in popularity?
The growing popularity of mobile wallets around the world is driven by three key factors: technology, demographics and innovation. The increasing penetration of smartphones, their improved processing power, longer battery life and faster connectivity, set the first and foremost technical premise.
Looking at the demographics, a growing share of millennials and Generation X is driving the demand for new mobile services. This consumer segment continues to incorporate more and more aspects of their life into the mobile phone – socializing, sharing, shopping, travelling, working – and payments is a natural extension already embedded in all these activities.
The third and most critical factor is the innovation and the entrepreneurship wave that we are witnessing around the world. Beam is the most significant example of how a UAE-based start-up has been able to innovate the traditional payment processes while delivering to consumers a rewarding and convenient way to shop. We built a universal wallet for both iOS and Android operating systems, which works across any platform and with any retailer.
Combine these factors with the Middle East mobile adoption figures, and you could immediately picture the current mobile wallets growth scenario. According to 2017 research stats, our region keeps boasting one of the world’s highest penetration in mobile subscriptions (127% of the population). The UAE holds the 4th position on two global ranks for the highest mobile internet speed connection and the highest average daily time spent on mobile devices (3 hrs and 54 minutes daily, 75% higher than the USA).
Why have they not been widely adopted in the UAE yet?
Mobile wallet adoption speed depends on the maturity of the payment sector in each country. Interestingly, adoption is slower in markets where there is higher penetration of debit and credit cards, such as the USA or Europe, as these already bring many of the benefits of electronic payments versus cash. In markets where cash is more prevalent, like China or India, mobile wallet adoption has been faster because it is acting as a technology ‘quantum leaping’ from cash to electronic payments without requiring card based methods.
The UAE has one of the highest penetration of debit and credit cards in the region, but our experience has shown that the creation of a truly seamless and rewarding experience can boost the adoption of mobile wallets.
As an example, in 2016 Beam recorded a remarkable spike in the app adoption following the launch of a world-first mobile payment service across the ENOC stations. Over 500,000 Beam transactions processed at ENOC in less than a year are proof that our customers enjoy fueling up with their phone from the comfort of their car.
What are some of the benefits of using mobile wallets?
Beam allows you to pay with your phone and earn instant rewards on each purchase. Whether you’re paying for your grocery, fuel, coffee on the go, cinema tickets, shoes, beauty treatments or laundry, you’ll only need to enter a PIN code or use your fingerprint to authorise your payment. You can also pay and tip your waiter at the restaurant and keep track of your expenses through the receipts stored in the app. All these services are delivered while complying with international security standards.
Nowadays one can split bills with friends at a restaurant quickly and efficiently, send money abroad or to a family member in just a few clicks with minimal fees, or even consolidate all payments and reward programs into one single account.
Are there any myths that people have about mobile wallets that you would like to dispel?
The main myth is the perception that mobile wallets are less secure than cash or payment cards. The most popular international mobile wallets – i.e. not focused in one country like India or China – are working on the rails of established debit and credit card payment schemes like Visa and Mastercard. The wallet acts as an electronic messenger of a payment process that, apart from the initiation step, is very similar to that of traditional credit cards. Debit and credit card numbers are never stored in the mobile phone. If one loses the mobile phone, the card information is not accessible from that phone nor can transactions be initiated without the fingerprint of the rightful owner. Compared to cash, we would always argue that electronic payments are more secure, as once cash is lost or stolen, its recovery is near impossible.
On a more technical note, NFC-based mobile payments are not more secure than mobile payments enabled by BLE beacons. There is no inherent security risk associated with the broadcast of BLE beacons signals. All security measures reside within the app that receives the signals, and for this reason, this solution offers a higher degree of control and customisation of the security protocols, beyond the standards provided by NFC tags.
What are some of the barriers that still persist to adoption? And do you expect these barriers to be lowered in the UAE?
Ubiquitous acceptance and complex technical integrations with rigid point-of-sale software have in the past affected the adoption speed of mobile payments in the Middle East.
Beam developed a close collaboration with Mastercard and Network International to lower these barriers. In parallel, forward-thinking brands like Carrefour, VOX Cinemas, Costa Coffee, Chili’s and ALDO, to name a few, led the way by accepting Beam and incentivized their customers to switch to mobile payments through tailored reward programs.
What 5 years ago was born as a retail marketing experiment is now a measurable tool to gain customers insights and support their marketing strategy.
As of today, over 3,000 stores accept Beam and many more in the UAE and Sweden are joining our partner network.
Where might mobile payments be most impactful? E.g The metro, cafés?
Mobile wallets are impacting all aspects of payment and all types of retailers. High-frequency businesses, like groceries and fuel, benefit from faster payment processing, reduction of payment queues and cash handling burden. In restaurants, bill payment can accelerate table rotation as the bill can be presented and paid in one single step. As demonstrated by Beam, mobile wallets can be an effective marketing platform to support retailers in delivering tailored promotions and measure the impact of their marketing campaigns.
Lastly, transportation, such as metro and taxis, offer mobile wallets a notable adoption opportunity as they significantly reduce payment time.