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Digital Payments and Financial Inclusion: The Case of Gulf Countries

Financial inclusion is one of the most popular talking points in today's global society, and this is also true for Gulf countries.

The global volume of digital payments is on the rise, with each year more people gaining access to financial services through various devices. This surge is attributed to the proliferation of smartphones, increased internet penetration, and the emergence of fintech solutions.

However, around 1.7 billion adults globally still do not have access to a bank account, yet they manage to find out ways to utilize financial services. How? They increasingly rely on non-banking financial solutions brought to life by fintech startups. Nevertheless, there are specific issues within this movement that must be addressed.

Financial services are a central part of society, essential for everything from buying food to enjoying culture. Ensuring that everyone has access to and receives the right information about financial services is key to engaging more people in society. To achieve this, more information is needed on how individuals experiencing any form of financial exclusion perceive these issues and their opinions on various solutions.

Different forms of exclusion exist in society, with homelessness being one prominent example. The rapid urban growth in Gulf countries has led to a housing crunch, especially for low-skilled workers. Oman stands out for its lower cost of living compared to other Gulf countries, but salary levels are still under pressure there. Nevertheless, the highest number of homeless people (in absolute figures) in the region is in Saudi Arabia - around 150,000 individuals. In Oman, this figure is about 4,000, in the UAE - 2,500, and in Qatar - 10,000.

Homelessness is more common in low-income countries, yet it remains a significant issue in Gulf countries. Providing access to financial services, especially in a convenient digital form, is an important milestone to reduce overall homelessness and give homeless individuals the opportunity to improve their standard of living and, ultimately, transition from being homeless.

The lack of a permanent address makes it difficult for the homeless to open a bank account and access banking services, including making payments. This underscores the importance of developing digital payments to enhance financial inclusion.

However, homelessness is not the sole measure of exclusion. Some individuals have housing but face limitations in other ways, such as lacking access to financial and digital services or living in challenging economic conditions.

Digital Inclusion

Financial inclusion in the world with digital payments means the reach of digital inclusion. And this is also a case about motivation.

Motivation and Technology Use

Motivation is linked to the willingness to use digital technologies. Without motivation, technology use will not occur even if access and skills are present. Reasons for lacking motivation may include concerns about security, a perception that digital technologies do not add value, or a feeling of being able to manage well without them.

Types of Motivation:

• Instrumental motivation: Desiring to use digital technology to achieve a specific goal or task, such as finding information or submitting a job application online.

• Social motivation: Wanting to connect with others through digital technology, like social media or online communities.

• Hedonic motivation: Seeking enjoyment or entertainment through digital technology, such as playing video games or watching online videos.

Evaluating Digital Skills and Tech Usage

Digital skills involve how and why different groups use new technology, the impact of professional life on digital capabilities, and demographic differences in skill levels. Besides, having access to digital tools, possessing sufficient knowledge and skills to utilize digital services and products is crucial. The evaluation of usage refers to the actual use of technology, how often it occurs, the purpose, and the advantages and disadvantages for users.

Financial Inclusion of Migrants Is in the Focus

Financial inclusion concerns the native population and foreigners working in Gulf countries. Around 88% of the UAE's 9.59 million population are expatriates. And only about 60% of migrants have a bank account, compared to 94% of Emiratis.

In Qatar migrants make up a staggering 94% of Qatar's 2.73 million population but just 55% of migrants have access to a bank account. Expat workers account for 89% of Oman's population but only 34% of migrants in Oman had a bank account.

In Saudi Arabia migrant workers constitute about a third of the population of 37,4 million in 2024. And 72% of Saudi migrants lacked access to bank accounts.

The relatively low access to the banking services for migrants led to the burst of the demand for neobanks, for fintech solutions in the sphere of digital payments. As a result, the combined total of outward remittances from the UAE, Qatar, Oman, and Saudi Arabia reached a huge sum, $73.5 billion, last year.

The adoption of digital remittance channels, like C3Pay in UAE, has increased, offering a сomfortable way for migrants to send money back home. The UAE makes additional efforts to increase financial inclusion. For example, Emirates Digital Wallet LLC owns and runs klip - the all-in-one digital wallet. As its motto boldly states: “Think outside the bank. A digital wallet for everyone.”

Digital Disparity: The Unseen Barrier

To develop financial inclusion, it is necessary to drive the development of social media into a one-stop hub not only for interpersonal communication but also for financial services targeted at the people.

Information and communication technologies can create not only information and communication benefits but also foster financial inclusion. This is achievable because the more people use the internet, the more they gain access to the global community of people alike, and thus access personal, lifestyle, and job opportunities.

However, the key issue is the intuitive and understandable interface of financial services offered on top of classical social media. This is not only a convenient way to interact but also a crucial factor in ensuring that people grasp how these services work.

It is important to focus on both access to technology itself, such as whether individuals have computers and/or smartphones at work and at home, and the ability to connect them, primarily through the internet. Personal smart gadgets must also be affordable for most people. Otherwise, we face the problem of digital divide.

Don't Exclude Cash

Addressing the digital divide is crucial for the future. However, the rapid movement into a cashless society can also have negative ramifications.

In the Gulf countries, over 50% of consumers are projected to go fully cashless by the end of 2024. However, official data may not accurately reflect the real use of cash in Gulf countries. Cash is still an important financial tool for the elderly and for those who prefer to hoard cash, despite the lucrative financial opportunities to get investment returns.

Moreover, there are still cases where the use of QR codes for payments can incur venue surcharges and payment-processing fees, making cash a more attractive option for some people.

Cash is also an important part of the financial system because, in the case of problems with digital payment infrastructure (such as electricity outages or cyberattacks), cash remains an essential backup option for businesses to receive payments for goods and services.


One way to enhance financial and digital inclusion is through Central Bank Digital Currency (CBDC). All Gulf countries are progressing in CBDC development, though at different paces.

Among them, the UAE is making significant strides with a digital dirham strategy, involving R3 and G42 for infrastructure and technology. This strategy aims to improve both domestic and cross-border payments, financial inclusion, and targets both retail and wholesale use.

Creating Digital Inclusion for All: A Key to Financial Inclusion

Promoting digital inclusion for all is key to achieving financial inclusion. This involves ensuring that all individuals, particularly those facing various forms of exclusion, have access to and utilize information and communication technology, including reliable internet access, appropriate digital devices, digital skills education, technical support, and software.

Digital financial services can also help reduce bureaucracy and lower costs, contributing to more inclusive and accessible financial systems for people across all social strata and locations.

In the Gulf countries, financial inclusion is closely tied to digital inclusion, as banks are highly digitized. To access many banking services, citizens must navigate a digital landscape.

In Oman, for example, the digital payment landscape is burgeoning. This is supported by the government's eOman strategy and the National Program for Enhancing Economic Diversification (Tanfeedh). The Central Bank of Oman has introduced the "Mobile Payment Clearing and Switching System" (MpClear), further promoting digital payments.

All of these developments, coupled with many cashless stores in Gulf countries, further incentivize participation in the digital world. Moreover, with the rise of digital currencies and blockchain technology, finance is becoming increasingly decentralized and at long last accessible to everyone.

Link: Medium

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