The instant payments industry has been making inroads in the GCC, transforming business-to-business (B2B) and customer-to-business (C2B) payments across all sectors. Companies like Kuwait-based Kem have even extended the application of instant payments into customer-to-customer (C2C) payments, allowing users to now send money to one another with simple QR codes.
While much progress has been made, what is even more exciting is how various governments and fintechs are investing in future developments that will have even greater impacts.
The current state of instant payments adoption
In 2021, Saudi Arabia, Bahrain, and Kuwait launched their real-time payment (RTP) schemes. On December 15, 2022, the Central Bank of the UAE also announced its plan to adopt RTP by 2023. Oman, Qatar, and Iraq also have plans to adopt RTP, according to Gulf Business.
It is no wonder then that ACI Worldwide, a payment systems company, listed the Middle East (led by Saudi Arabia and Bahrain) as the world’s leading adopter of RTP, with $675 million worth of transactions processed in 2022.
QR codes, another form of instant payments, have also experienced significant growth in usage in the Middle East (and especially the GCC). According to data provided by Bitly, a link management platform, the MENA region experienced the highest growth between H1, 2022 and H1, 2023, with a 66% increase in QR code creation.
The impact of instant payments adoption
Instant payments “are cheaper than existing card payment mechanisms, more secure and faster,” according to Accenture.
With these advantages, new payments tech has been able to greatly contribute to the development of digital payments, ecommerce, and the retail sector in the region.
In Saudi Arabia, 95% of customers now use online payment solutions and the country’s RTP solution (SARIE) has been a relief for customers. Data from its central bank shows that there was a 28% increase in usage just between April and May 2023.
Similarly, the share of electronic payments in the retail sector reached 62% in 2022, exceeding the 60% target set by the government. All of these are due to “significant improvement in payment infrastructure, the enhancement of existing systems, and the introduction of new systems and services,” according to the country’s central bank.
Also, Pay Net Easy, a payments provider, identified RTP and BNPL (buy now, pay later) as two innovations that are capable of meeting the demand of UAE customers and support the growth of its ecommerce market. In 2021, 21 million transactions, worth AED 51.7 billion were processed by its Immediate Payment Instruction (IPI) platform, a 47% increase from the 2020 figures.
QR codes have even transcended the world of retail and commerce. Hospitals, health centres, and transport authorities are using them in the UAE, and Saudi Arabia’s foreign affairs ministry is also deploying them.
We can go on and on, but the point is clear: the adoption of instant payments in the GCC region has been transformative.
The future of instant payments in the GCC
For the entire Middle East, the expectation for RTP growth is 30.6% CAGR, moving from $675 million worth of transactions in 2022 to $2.6 billion transactions in 2027. They expect Saudi Arabia and Bahrain to continue to lead.
Likewise, the QR codes industry will continue to grow. Future Market Insights expect the industry to be worth $55.60 billion in 2033, a 16.9% CAGR from its current $11.67 billion valuation.
The GCC region is expected to keep increasing its adoption of this technology especially with companies like Kem already employing the technology for customer-to-customer transfers.