UAE acquiring payment market enjoys strong growth fundamentals

The UAE acquiring payment market has witnessed significant growth in recent years. Dimitri de Kéchilava, Associate Partner at Bain & Company, outlines the key drivers behind the market’s growth and continued positive outlook.

In 2024, the UAE merchant acquiring market reached a total payment volume (TPV) of approximately $150 billion, representing a compound annual growth rate (CAGR) of 13-14% since 2020. Market revenues totalled $470 million, reflecting a slightly higher CAGR of 15%, primarily due to increased SME and value-added services penetration, while still facing price pressures within a highly competitive environment.

The UAE payment ecosystem is rapidly transitioning toward digital solutions, driven by supportive government initiatives, increasing e-commerce activity, and evolving consumer behaviours. Key market trends contributing to payment growth include:

• Shift towards cashless transactions: Growing adoption of cards, digital wallets, and Buy Now, Pay Later (BNPL) solutions.
• Government initiatives: Regulatory frameworks promoting reduced reliance on cash transactions.
• Booming e-commerce activity: online transactions projected to grow ~15% annually through 2028.
• Increased SME penetration: payment revenue growth from small and medium enterprises expected at approximately 16% annually (versus ~10% for the enterprise segment)
• Value-added services: SMEs increasingly demanding enhanced offerings like data analytics, dashboards, and dynamic currency conversion, creating additional revenue streams for payment acquirers.

The competitive landscape remains dynamic, with existing payment providers expanding capabilities, and new market entrants continuously emerging. Both established players and newcomers are actively pursuing licensing and strategic partnerships to increase their presence.

Despite strong market growth, several challenges persist, including price pressures reducing revenue margins, slower-than-expected SME adoption (currently accounting for only 25% to 30% of transaction volumes), and low penetration rates of integrated software vendors (ISVs) currently at around 2%.

Market Outlook

The UAE acquiring payment market is projected to maintain its upward trajectory over the next five years, driven by digital transformation, ongoing government support, and rising consumer preference for digital payments. Providers will increasingly focus on innovation, value-added services, and customer-centric solutions to succeed in this evolving competitive environment.

For acquiring businesses to sustain and enhance growth, it will be crucial to invest strategically in innovation and develop value-added services that differentiate them in the dynamic marketplace. Market players that proactively integrate innovative solutions and technologies will be best positioned for future success.