A Cashless Economy in the UAE: the benefits of utilising online payment systems over cash on delivery

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Naturally, the global pandemic has caused a shift in preferred payment methods.

Back in 2017, reported that cash on delivery (COD) historically accounted for 64% of all eCommerce orders.However, as reported in March 2020, 73% of respondents in the Middle East now favour paying by credit card, with 84% stating they now consider digital payments as highly secure over cash.

Similarly, in the United Arab Emirates eCommerce Landscape 2020 Report, Dubai Economy and Visa have confirmed that “the UAE eCommerce sector is expected to see continued growth as more UAE consumers demand online payment options and merchants increasingly recognise the need for an online presence during the coronavirus pandemic.” The report also states that while UAE consumers currently prefer to pay using credit cards, the use of debit cards to shop online has increased by more than 7% between 2018 and 2020, pointing to a higher degree of trust in the transaction process that is reflective of a maturing market. Many retailers have now shifted to charging a fee should a customer wish to use a cash on delivery option.

Director General at Dubai Economy, Sami Al Qamzi, commented: “cashless payments and eCommerce are definitely on a faster trajectory than anticipated, and we look to translate this unprecedented growth into an opportunity for businesses of any size to establish and enhance their presence online.”

Marcello Baricordi, Visa’s General Manager for Middle East and North Africa, said: “we’ve seen a number of adoption barriers reduce as the demand for eCommerce and contactless commerce skyrocketed during the lockdown. We call these habit forming behaviours as more consumers and merchants have now experienced the security, convenience and range of online commerce and we anticipate this trend to continue post-pandemic. Because of this, businesses that work to adapt to this new world of eCommerce and digital payments have the best chance at both recovery and thriving. All merchants regardless of size must now think beyond just adapting and focus on their medium and long term strategy”.

Why should retailers make the switch to online payments over COD?

Coronavirus has certainly pushed consumers even further towards digitised payments in order to minimise the risk of contamination when handling cash. However, 48% of consumers surveyed in the UAE have also reported that they will “continue to opt more for paying online with card or digital wallet over COD”.

Still not convinced? Here’s how online payments could enhance your business operations:

  • Streamline the payment process
    As a retailer, you have the ability to offer various online payment methods. The process is far faster than COD, as there is no time between delivery and payment - the payment is processed in real time, with no waiting required. This allows you to centralise all your business payment processes, and presents a far more comprehensive overview of your revenue.

  • Reduce fees
    There are no special COD courier fee required, as any standard delivery service can be used. COD couriers charge amount when opting for the cash on delivery payment option.

  • Reduce returns
    After making a payment online, customers will feel like they already own the product and are therefore less likely to return it. A study by YourStory reported that cash on delivery methods had an 40% return rate - opposed to an average return rate of 20% in eCommerce purchases.

  • Secure payments
    By working with PCI DSS Level 1 Certified payment providers you can be safe in the knowledge that the payment process is highly secure, will use risk management technology and fraud detection algorithms to reduce fraud and chargebacks for the retailer, and also make customers feel more confident about the purchase, too.

  • Enhance referral marketing efforts
    By accepting payments online, you can open up your business to new affiliate opportunities, creating uplift in revenue. Additionally, you are able to easily offer discounts to customers when paying online. This is also an effective way of encouraging shoppers new to eCommerce to place their first online order and, once they have had a positive experience with an online payment gateway, they are likely to continue this manner of shopping into the future.

  • Optimise the customer journey
    Online payments mean that consumers can purchase whenever, from wherever. In making the purchase process far easier, they are more likely to complete a transaction and subsequently return for repeat purchases. You can also open up your business to the entire world and reach global audiences.

  • Increase impulse purchases
    By removing any barriers to purchase and making it possible for the transaction to be completed there and then, the likelihood of impulse purchases will increase. With COD, as there are disjointed steps in the purchase process there’s less of a chance to encourage purchases by impulse.

  • Recurring payment capabilities

By accepting online payments, you open up your business for subscription and repeat payments meaning, as a merchant, you can enable recurring billing features through the payment providers. This can increase conversion rates as subscriptions translate into fewer required actions to make or accept a payment, for the shopper and the seller.

The most commonly used payment gateways in the UAE are and Payfort; both of which Visualsoft are proud to integrate with. Similarly, many retailers also offer a pay by Paypal option which is widely accepted by shoppers who are happy to checkout in USD!

Want to find out more about the other payment options available?

Visit our Feature Hub for more information, give us a call on +971 56964 2052 or simply fill out the form. We can’t wait to hear from you!