Accepting payments in the United Arab Emirates—where the value of the retail market surpassed 306 billion UAE dirham (AED) in 2022—can create significant opportunities for your business to grow its customer base. Businesses that want to enter the UAE market must pay attention to local payment preferences, emerging payment trends, and UAE government regulations regarding payment security.

Below, we’ll explain what businesses should consider when they enter the UAE’s payment system, including:

• Focusing on contactless payments
  
• Tightening payment security
  
• Localizing customer support
  

The state of the market

The payment system in the UAE merges a rich cultural heritage with a keen interest in technological advancement. Deep-rooted cultural preferences such as cash on delivery (COD) coexist with a growing appetite for digital transactions. While credit cards and bank transfers remain prevalent, digital wallets have seen an increase in adoption among UAE residents.

The Central Bank of the UAE plays an important role in crafting and implementing the nation’s monetary policies. The Securities and Commodities Authority also oversees the capital market in the UAE and regulates companies with publicly traded assets. The UAE’s financial regulations reflect a mix of international best practices and local considerations, with a particular emphasis on Islamic finance principles.

Payment methods

The UAE is a vibrant hub for commerce. Here’s an overview of popular payment methods among UAE customers.

Current usage

In 2022, cash accounted for about 38% of point-of-sale (POS) transactions in the UAE. With the growth of online shopping, credit card transactions have become the most popular form of payment in the UAE. They make up 40% of POS transaction value and 41% of ecommerce transaction value in 2022.

A defining feature of the UAE’s payment space is the high adoption rate of digital payment solutions beyond traditional credit cards. In 2021, contactless payments made up 84% of all in-person card transactions in the UAE. Digital wallets like Google Pay, Samsung Pay, and local players (e.g., Beam, Etisalat Wallet) are also popular, making up 24% of total ecommerce transaction value and 16% of total POS transaction value in 2022.

Popular B2C payment methods in the UAE

• Credit cards
  
• Digital wallets (e.g., Beam)
  
• Bank transfers
  
• UAE Direct Debit System (UAEDDS)
  

Popular B2B payment methods in the UAE

• Credit cards
  
• Bank transfers
  
• Wire transfers
  

Emerging trends

The UAE ranks among the top countries in the world for cryptocurrency adoption, and over 30% of UAE residents owned cryptocurrency in 2023. However, the general public’s relationship with digital currencies remains cautious.

Ease and friction of entry

Accepting payments in the UAE requires special considerations regarding taxes, chargebacks, cross-border payments, and payment security. Here’s a closer look.

Taxes

The introduction of value-added tax (VAT) in the UAE in 2018 marked a shift in its tax system. A 5% VAT is applied to most goods and services. While customers pay this tax as part of their purchases, businesses are responsible for collecting and remitting it to the Federal Tax Authority.

Chargebacks and disputes

Similar to European regulations, the UAE’s regulations lean toward a customer-friendly approach when it comes to payment disputes. When a customer raises a dispute, the business must provide evidence that supports the legitimacy of the transaction. Businesses can make it easier to manage disputes by keeping thorough documentation of transactions, including transaction records, delivery proofs, and any correspondence with the customer.

The UAE’s free zones, such as the Dubai International Financial Centre and Abu Dhabi Global Market, have their own procedures regarding chargebacks and disputes. Businesses that operate in these zones must be aware of their specific requirements.

International payments

Given its important location and high level of participation in international commerce, the UAE handles a substantial volume of cross-border transactions. Here are a few factors to consider if your business plans to accept international payments in the UAE.

• Multicurrency functionality
  Businesses that operate in the UAE, especially those that work with international clients, might choose to use multicurrency bank accounts. These accounts allow businesses to hold multiple currencies at once, reducing the need for frequent conversions.

• Currency conversion
  When currency conversions are required, a business can face fees ranging from 1%–3%, which might be absorbed by the business or passed on to its customers. The AED’s value has been pegged to the US dollar at a rate of $1 to 3.6725 AED since 1997, providing stability in conversion rates, and the Central Bank requires that all fees and exchange rate markups be transparent.

Security and privacy

The UAE’s commitment to local and international security standards, coupled with advanced technological measures, makes its payment environment safe for businesses and customers. Here are some highlights.

• Data protection laws
  While the UAE doesn’t have a central data protection law similar to the EU’s General Data Protection Regulation (GDPR), individual emirates such as Dubai have implemented their own regulations. For instance, the Dubai International Financial Centre has the Personal Data Protection Law, which emphasizes data minimization, purpose limitation, and appropriate security measures.

• Central Bank guidelines
  The Central Bank of the UAE shapes the country’s financial environment. Its guidelines cover transaction authentication and encryption standards, aiming to protect electronic payments in the UAE against fraud, unauthorized access, and other risks.

• Customer authentication standards
  Multifactor authentication (e.g., one-time passwords, biometric verification) is becoming standard for online transactions, adding another layer of security to payments.

• Electronic money regulations
  Since 2020, the Central Bank’s Stored Value Facilities Regulation has shaped the direction and structure of electronic transactions, with the goal of protecting customers’ data (which must be stored and maintained in the UAE).

• Anti-Money Laundering (AML) laws
  The UAE has strict AML laws that require financial institutions to implement rigorous due diligence processes. The country expanded its commitment to combating money laundering by establishing the Financial Intelligence Unit, an organization responsible for gathering and analyzing intelligence related to financial crimes.

• Cybersecurity frameworks
  Amid the rise of digital transactions, the UAE has recognized the importance of a strong cybersecurity framework. The National Electronic Security Authority developed a set of standards and best practices to help organizations mitigate cyber risks. These cover areas from risk management to incident response.

• Local payment systems
  The UAE has seen the rise of several local payment systems that cater to its diverse population. Systems like UAEDDS and the UAE Funds Transfer System provide secure transaction methods for both residents and businesses. Strict regulatory oversight keeps these platforms resilient against threats and vulnerabilities.

• Free zone compliance
  The UAE’s free zones have their own regulatory bodies and compliance standards. While these zones operate autonomously, their regulations are in sync with the UAE’s national standards.

Key success factors

The UAE is at the forefront of financial improvement in many ways, but its payment environment presents inherent challenges. Addressing these challenges requires a combination of technological solutions, regulatory conformity, and knowledge of local preferences.

• Traditional payment options
  While digital payment methods are the norm, cash remains in use across the UAE and accounts for 23% of consumer transactions in 2024. COD payments for online purchases are also still present despite their declining use. This dynamic can pose challenges for businesses that are trying to drive digital adoption and simplify their payment processes. But ecommerce businesses that accept cash in person and COD payments can appeal to a customer segment that avoids digital methods and promote a sense of familiarity and trust.

• Local payment methods
  Accommodating payments from local card networks, as well as local digital wallets like Beam and Etisalat Wallet, can be instrumental in the UAE. While global players like Visa, Mastercard, and Google Pay are present, businesses that accept domestic methods will appear inclusive and well integrated to the UAE customer base.

• Attention to hyperlocal nuances
  Because individual emirates implement their own regulations regarding data protection and the UAE’s free zones can establish their own rules regarding payment disputes, it’s important to pay particular attention to the details of local regulations.

• Multicultural approach
  The UAE’s rich culture influences locals’ payment preferences. Personalizing promotions or payment incentives around religious holidays such as Ramadan and translating your payment interfaces into multiple languages can resonate with the local population.

Key takeaways

The UAE presents a distinct market for businesses that want to improve the payment experience. Customizing the payment process to the cultural, technological, and economic nuances of the UAE can increase transaction success rates and customer satisfaction. Here’s an overview, along with tips for accepting payments in the UAE.

Focus on contactless payments

• Go contactless for card payments
  Contactless cards make up a majority of in-person card transactions in the UAE. Offer this option alongside cash and other digital payment methods.

• Integrate digital wallets
  Digital wallets from Google Pay to Beam are popular in the UAE. Ensure your business can accept digital wallet payments in person and online to cater to a tech-savvy customer segment.

• Refine for mobile
  On top of facilitating digital wallet transactions, fine-tune payment interfaces and checkout pages for fully mobile purchases.

Tighten payment security

• Guard online transactions
  Ecommerce businesses handle various types of fraudulent transactions. Employ 3D Secure authentication and machine learning fraud detection tools to catch ecommerce payment fraud early.

• Verify customer identities
  As an extra layer of protection against payment fraud, verify customers’ identities through two-factor authentication, one-time passwords, or address verification service (AVS).

• Prioritize data protection
  Ensure your business complies with local data protection regulations, implement secure payment gateways, and communicate your data security practices to UAE customers.

Localize customer support

• Provide multilingual support
  The UAE is home to a substantial non-Arabic-speaking population. Incorporate multilingual support, especially in Arabic and English, to make your payment experience more inclusive and easier for customers to follow.

• Offer responsive customer support
  Make customer support for payment queries easily accessible for a smoother transaction process. Given the time-sensitive nature of online purchases, timely assistance can be the difference between a successful transaction and an abandoned cart.

• Be transparent about refund policies
  UAE regulations underscore the importance of clear return and refund policies, especially for ecommerce businesses. Adopt these practices to comply with local regulations and help boost customer loyalty.