Visa Unveils Emerging SME Megatrends in UAE, Highlighting Significant Opportunities for Issuers

Study reveals the major trends shaping the UAE SME market and how issuing banks can tailor their business solutions to tap into the SME financial needs
49% of UAE SMEs identified accepting contactless payments as a critical investment area to meet consumer expectations

Dubai, UAE, July 22, 2024: A new study from Visa, the SME Megatrends report, delves into the ever-evolving landscape of Small and Medium Enterprises (SMEs) in the United Arab Emirates (UAE). As SMEs undergo significant transformation, particularly in the digital and financial domains, the report identifies how issuing banks can leverage the needs and challenges facing businesses to unlock new revenue opportunities, gain a competitive edge and influence SME growth and scalability prospects.

Regulatory policies, funding, and digital transformation initiatives and more are enhancing the local business landscape, fostering new opportunities for businesses in the UAE. In such a dynamic environment, SMEs are swiftly embracing the digital potential by expanding their online presence to attract new customers, adopting contactless and digital payments to stay competitive and incorporating digital business tools to optimize business operations.

The rapid acceleration of digitization within the region’s SME sector presents a wealth of new revenue opportunities for issuing banks. By facilitating access to essential financial products and services, banks can tap into this potential, resulting in an expanded customer base, increased transaction volumes, and heightened revenue prospects. By working in partnership with Visa, issuing banks can deliver bespoke financial products tailored to SMEs' unique needs to actively promote inclusive economic growth.

Salima Gutieva, Vice President and Country Manager for the UAE, Visa, remarked, “At Visa, empowering SMEs isn't just about enabling transactions; it's about enabling transformation. SMEs are the backbone of economies worldwide, playing a critical role in driving growth, innovation, and employment. In a rapidly changing environment, it's imperative for issuing banks to deeply understand their needs and develop targeted solutions that propel the SME sector forward."

“We are confident that the SME Megatrends report will help issuing banks adapt their offerings to better meet the needs of SMEs in the market. By pinpointing ways for issuers to provide SMEs with vital financial products and services, Visa seeks to foster economic growth collaboratively. This effort not only aids SME development but also contributes to new channels of prosperity, offering meaningful benefits for the economy at large.”

In the UAE, the key SME Megatrends identified include:

Greater Desire for a Streamlined Banking Experience: Although UAE banks have taken significant steps to enhance the process of opening a bank account for SMEs, it can still be challenging and expensive.
Need for Easier Access to Credit to Facilitate and Optimize Cash Flow: Obtaining financing from banks can be a hurdle for SMEs due to short credit histories, difficulty providing collateral, interest rates, and administrative hurdles. The government is actively working to support SMEs through regulatory changes and development funds, in line with UAE’s 2030 vision.
Integration with Social Media Platforms: SMEs are increasingly leveraging social media and e-commerce platforms to build their marketing presence and tap into the digital economy.
Contactless Payments are Playing a Growing Role in Digitizing SMEs: As mobile payments and digital wallets grow in tandem to changing consumer behaviors and payment patterns, 49% of UAE SMEs are accepting contactless payments as a critical investment area to meet customer expectations.¹ In the UAE, the use of digital payments has massively increased with over 90% penetration of in-store digital contactless transactions.
Increased Movement Towards Digital Payments, Away from Checks: Though checks are still commonly used in the UAE, SMEs are moving towards low-cost and faster digital payment options² demonstrating demand for solutions such as Tap to Phone and Visa Direct for cross-border transactions.
Investment in SME Digitization Tools is Increasing: SMEs are increasingly using invoicing and expense management platforms to digitize financial processes and digital accounting software, though 74% of SMEs still rely on manual processes and basic communication tools.³
Growing Interest in Providing Better Employee Benefits: In the UAE’s competitive market, 86% of businesses would provide additional employee benefits if they were more affordable to attract and retain top talent.⁴

Empowering the Ecosystem, Driving Growth

Visa recognizes the pivotal role of SMEs in driving economic growth and is committed to integrating them into the digital economy. Visa offers numerous payment services designed to help SMBs pay and get paid, including Visa Business credit and debit cards, rewards programs, business and payment management tools (including virtual cards), fraud and security services, product solutions like, Tap to Phone, among many other solutions. Digital payment technology is believed to be the foundation to grow business⁵, with 95% SMEs accepting the value received is at par or more than the price paid for digital payment setup and more than 7 in 10 merchants believing such an investment to be business critical.

Visa has already digitally enabled nearly 67 million SMBs worldwide, leveraging its extensive expertise and partner network, exceeding our three-year goal of digitally enabling 50 million SMBs globally. This achievement underscores Visa's profound expertise and the strength of its partnerships. Visa empowers SMBs through platforms including She’s Next, a global advocacy program for women entrepreneurs, Visa Everywhere Initiative for fintech startups and also provides financial education and business skills training, including Practical Business Skills, a global digital platform delivering free educational resources.

Understand how issuers can tap into emerging opportunities in the UAE’s SME landscape by expanding and tailoring financial products and services for businesses. Read Visa’s UAE SME Megatrends report here.

^1,2Visa Back to Business Study (2021), Visa Economic Empowerment Institute (2021), Boku (2021), KoreFusion analysis

³ Dubai Chamber of Digital Economy (2022), Visa (2023), Ministry of Economy (2021), KoreFusion analysis

⁴ Zurich International Life Middle East (2022), KoreFusion analysis

⁵ 2024 Visa Value of Acceptance Study