M-commerce still at infancy in UAE

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UAEs strict regulation has stalled shoppers from doing online shopping. According to Euromonitor International, cash transactions are the preferred route for retail payment and accounts for two thirds of total transactions in UAE. However, UAE is still a leader among other Middle East countries when it comes to online transactions.

Payments made through mobile phones, popularly known as M-commerce, have not made any progress despite the fact that 99.1 per cent of the population owns high-end mobile handsets.

Umer Rabbani, sales manager at SunGard, noticed that despite the population moving out of their conventional thoughts regarding online payments, the customer confidence is still low and the volume of online transactions are relatively low compared to other parts across globe.

However, Euromonitor predicts online transaction to improve in the coming years and will almost double in the next four years. Last year online transactions accounted for Dh701 million (US$190.8m) and is expected to reach Dh1.3 billion in the year 2015. Web shoppers are likely to shop for consumer electronics, while other industries are apprehensive about selling their goods and services online.

UAE region has the potential to be a prime region for online retail shopping. The population, in general, is tech savvy with high usage of mobile phones and the Internet. This makes the payment transaction gateways such as PayPal to have a base in the region.

Mr Rabbani observed that it would be a challenge to international players to establish themselves in UAE. The region still has problems such as lack of data infrastructure and absence of an local online payment provider. Absence of local partner means involving two countries and currencies. This creates a barrier for small and medium businesses who would have otherwise implemented m-commerce.

The market is yet to pick up and for the time being firms who are into online payment mechanism are concentrating in other markets such as China and India. Still, some international players have shown keen interest in the region.

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