Major changes were seen in financial cards and payments during 2020, with Coronavirus (COVID-19) speeding up the move away from cash, as consumers and retailers tried to avoid handling it, and providing strong impetus for contactless payments, seen as the most hygienic means of paying for goods, as well as further growth in e-commerce, with consumers locked down for extended periods in their homes or trying to avoid public places during the pandemic.
Consumer spending patterns in the Middle East and Africa were significantly affected by the pandemic in 2020. When possible, people avoided handling cash for hygiene reasons, encouraging greater use of card and, in particular, contactless payments. Debit cards were the main beneficiary of this, with people looking to keep control of their spending in a difficult economic environment.
While cash remains an important payment mode, particularly in African countries, it continues to lose out to alternative forms of payment. As the banked population continues to expand and more retailers install POS payment terminals, consumers are increasingly won over by the convenience of cashless payment methods, particularly via their smartphones. Government policies will also encourage the trends towards financial inclusion and cashless transactions.
Although major players still tend to lead national markets, they are experiencing intensified competition from emerging fintech companies, which have even been receiving support from central banks. This is leading the bigger players to create strategic partnerships with fintechs to offer innovations to their customers.
M-commerce continued to gain momentum across the region, supported by improving internet penetration and widespread smartphone ownership. Evolving shopping habits, with mobile becoming a multifunctional tool, will continue to help drive further m-commerce growth.
In spite of the economic impact of COVID-19, the post-pandemic period is expected to see a return to positive annual growth rates for consumer payments from 2021.
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