UAE Turns To Smart Payments

The UAE has been one of the slowest markets to adopt electronic payments, but a push by the government to offer more e-governance services and the adoption of more secure technology is now slowly reversing the trend.

According to a recent study by MasterCard surveying 33 countries, UAE is amongst those most rapidly moving towards a cashless society. It also has one of the fastest improving payment systems of the countries studied, the report found.

The UAE government has continuously promoted the use of electronic payments through its smart government initiative. But now it’s taking a step further with its plan to facilitate payments through the Emirates ID card.

Emirates Identity Authority (Eida) is currently working with other industry stakeholders to facilitate payments through identity cards and introduce digital signature authentication got secure transactions through smart- phones. It is also planning to facilitate the use of ID cards as potential ATM cards in the future.

In order to test its viability, Eida launched a pilot project with Al Hilal Bank in December last year, that enabled the bank’s customers to use their ID as an ATM card.

“Our co-operation with the payments industry in the country resulted in the launch of a number of innovative projects such as the use of the identity cards in withdrawing money from ATMs,” said Ali Mohamed Al Khouri, director general, Eida, during his opening address at the Cards and Payments Middle East 2014 conference.

“This cooperation will widen in the near future, culminating in the use of the identity cards for e-payment transactions at various sales outlets,” he added.

“I also expect to expand the use of Emirates ID cards as an introductory card in the banking sector in the near future.”

The use of ID cards for e-payments is also expected to help counter online fraud in the region by providing a valid digital identity.

“The infrastructure is so advanced that the minute you insert the ID card in an ATM machine or at a point of sales terminal, there is an online validation. This is similar to credit cards but you are getting the authentication straight from the government,” said Al Khoori, emphasising the safety of such transactions.

Although card security concerns in the region could be mitigated to an extent by such government efforts, experts believe that advancements in the world of technology could open up a host of other channels, which could complicate things.

In the future, you could see payments made by wearable technology, for example, which in turn would require banks and card companies to find new validation procedures.

“A major challenge would be how to simplify technology for customers and how we use technology for the advantage of the customers,” said Nimish Dwivedi, head of payments, Mashreq Bank.

“There is always a security barrier and there are ways to meet it for the customers and merchants. The biggest challenge is how banks handle it and simplify it… because there is also a complex way to secure payments, where customers might drop out saying it is too complex.”

Keeping to the mantra of safe and simple, MasterCard has introduced a new mobile wallet programme called MasterPass, which require users to enter their card details just once as they set up their accounts.

Gary Lyons, chief innovation officer and head of MasterCard Labs emphasised the importance of simplifying technology for users when working with the latest innovations.

“The focus should be on using technology to make the experience better or the customers will not change their behaviour,” he said.

“Our job is to facilitate that and make sure the payment is fast, simple and safe.”