In an era where digital transformation is reshaping industries at lightning speed, one might expect physical payment cards to be on their way out. But in the UAE, they remain firmly entrenched in the everyday lives of consumers.
Despite the rise of digital solutions, 67 percent of UAE residents continue to carry two or more physical cards, according to a 2024 survey on Global Consumer Payment Trends conducted by Dentsu Insights for IDEMIA Secure Transactions.
So, why do physical payment cards still hold sway in a region that prides itself on innovation and technological adoption?
The tangibility of trust
One of the key reasons physical cards continue to thrive in the UAE is their tangible nature.
Cards represent more than just a means of payment; they are a physical link between consumers and their banks — an entity they trust implicitly. For many, this link provides comfort in an increasingly digital world where financial transactions have become invisible, existing only in the cloud. There’s a sense of security that comes with holding something tangible, a sentiment that is difficult to replicate with purely digital alternatives.
Culturally, the Middle East has always had a strong connection to cash. Transitioning to fully digital payments requires a significant leap that many are not yet willing to make.
Payment cards offer a bridge, allowing consumers to move away from cash while still retaining a sense of control over their finances. This is particularly important for older demographics and expatriates from regions with slower digital payment adoption, as these are people who are more comfortable with physical payment methods.
Security concerns and consumer confidence
Another major factor influencing the continued preference for physical cards is security.
While digital payments are convenient, they have not yet fully won over consumers in terms of trust. UAE residents are particularly wary of online fraud, with 84 percent expressing concerns about cybercrime, higher than the global average of 79 percent. The rapid increase in cyber scams has made consumers more cautious about adopting fully digital payment methods despite the best efforts of financial institutions to bolster security.
The physical card, by contrast, provides a sense of security that digital solutions, despite advancements in biometric authentication and blockchain, have not yet been able to match in the minds of many consumers. Even those who regularly use digital wallets often rely on digital representations of their physical cards, reinforcing the continued importance of the card itself. This dual reliance suggests that the physical card is not simply a fallback option but a trusted companion in the digital world.
Bridging the gap: Age and affluence
Demographics also play a crucial role in payment preferences. Older residents, particularly those over 45, are more likely to rely on physical cards, valuing familiarity and ease of use.
But it’s not just about age: Affluent consumers are drawn to physical cards for the tangible benefits they offer. High-net-worth individuals often enjoy perks, such as rewards, cashback, and exclusive offers linked to premium card products, including metal and biometric cards. These cards offer a sense of luxury and security, which appeals to this demographic.
In fact, card design has become a status symbol, with metal cards and other premium designs serving as differentiators in a competitive market. The co-branded physical card remains a powerful tool for both customer engagement and brand recognition, and UAE banks have capitalized on this by creating innovative, visually striking products that enhance loyalty.
The physical and digital balance
Contrary to what one might expect, the preference for physical cards does not seem to slow the adoption of digital services in the UAE. Rather, the two payment methods complement each other.
Digital payments are on the rise, with over 50 percent of UAE residents expected to be making cashless transactions by the end of 2024. However, physical cards continue to play a pivotal role in the ecosystem.
This dual reliance does not hinder digital transformation efforts but instead fosters a balanced approach. UAE banks and retailers are adept at managing both physical and digital solutions, offering customers a seamless payment experience across channels. The advanced financial infrastructure in the UAE, supported by government initiatives like the Financial Infrastructure Transformation (FIT) program, ensures that both payment methods coexist harmoniously.
Emerging technologies and the road ahead
Looking ahead, emerging technologies, such as biometric authentication and blockchain, will likely play a role in bridging the trust gap between consumers and digital payments.
Biometric cards have seen a surge in interest, with 93 percent of UAE consumers viewing them as a sign of banking innovation. Younger generations, especially those aged 18-37, are more open to adopting these advanced card technologies, while older consumers remain attached to traditional methods.
Retailers and banks alike are focusing on creating hybrid payment solutions that accommodate both preferences. Innovations like hybrid payment terminals, mobile wallets, and blockchain-based platforms offer flexibility, security, and convenience. As the market evolves, the challenge will be to maintain consumer trust while encouraging a gradual shift towards more secure and convenient digital payment solutions.
As the UAE marches toward a cashless future, the enduring appeal of physical payment cards is a testament to the importance of trust, security, and familiarity in financial transactions.
While digital solutions will undoubtedly continue to grow in popularity, the physical card will remain an integral part of the payment landscape for the foreseeable future. For UAE residents, the choice between physical and digital is not an either-or proposition but a balanced co-existence that supports the nation’s digital transformation while respecting its cultural and security concerns.
Hennie Du Plessis is the SVP of Payment Services – MEA, IDEMIA.
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