UAE Payments Sector To Hit $27.3bn In 2028

Despite a global slowdown in growth rates, the UAE continues to lead in the GCC, driven by its rapid digital transformation and strategic investments in the financial sector.

Its Global Payments Report 2024 marks BCG’s 22nd annual analysis of the global payments industry, emphasising the need for decisive action in navigating a rapidly evolving landscape.

UAE payments industry

The report highlights the importance of adapting to shifting customer expectations, heightened regulatory scrutiny, and technological disruptions. While growth is slowing globally, the UAE remains a bright spot in the region, continuing its high growth and innovation trajectory.

Globally, payments revenue growth is projected to slow significantly, with CAGR halving to 5 per cent through 2028, resulting in a global payments revenue pool of $2.3tn.

This marks a sharp decline from the 9 per cent CAGR observed over the previous five years, which pushed the global revenue pool to $1.8tn in 2023.

North America and Europe are expected to experience the most significant slowdowns, with projected annual revenue increases of just 3 per cent.

In contrast, regions like the Middle East, Latin America, and Asia-Pacific are forecasted to see higher growth, with the Middle East projected to grow at a 7 per cent CAGR, driven by accelerating digital payments in emerging markets.

The UAE’s payments sector has seen robust growth in recent years. From 2018 to 2023, the country’s payments revenue grew from $9.8bn to $18.8bn, with a CAGR of 13.8 per cent.

By 2028, the UAE is projected to reach $27.3bn in revenues, marking a 45 per cent increase over the next five years.

Transaction volumes in the UAE are also forecast to rise significantly, from 1.7bn in 2023 to more than 3.1bn by 2028, representing a 78 per cent increase.

The shift from cash-based to digital payments, spurred by government initiatives and increased fintech adoption, continues to drive this expansion.

Lukasz Rey, Managing Director and Partner and Head of the Middle East Financial Institutions Practice at BCG, said: “The UAE’s payments landscape is reaching a critical inflection point. As we move beyond the era of easy growth, the sector must pivot from pure expansion to sustainable profitability.

“Tech modernisation is no longer optional – payment firms must upgrade their legacy systems to modular, scalable, cloud-ready architectures to reduce tech debt, improve unit economics, and adapt efficiently to evolving market demands.

“Early adopters already leverage generative AI to enhance customer service, strengthen fraud detection, and drive operational efficiency at scale.

“With intensifying global pressures and regulatory scrutiny, UAE companies that act decisively now, investing in modern tech stacks while strengthening their risk and compliance frameworks, will be best positioned to deliver the seamless experiences customers demand and the sustainable returns investors expect.”

The global payments industry is at a turning point, requiring companies to shift from easy growth to bold, strategic approaches, and reporting highlights that digital payments are nearing maturity in critical markets like the US and UK, with less than 10 per cent of transactions still in cash.

Shareholder value creation has evolved, with buybacks and dividends making up over one-third of total returns. Instant payments are now standard in more than 60 countries, while central bank digital currencies (CBDCs) are poised to disrupt the landscape.

Generative AI is already cutting costs by up to 70 per cent for early adopters, making modernisation essential for staying competitive.

As emerging technologies like generative AI, real-time payments, and digital currencies reshape the global payments landscape, the UAE remains well-positioned for long-term success through continued innovation and modernization.

Mohammad Khan, Managing Director and Partner at BCG, said: “The growth momentum in the UAE payments sector is clear. With UAE transaction volumes expected to increase by 78 per cent, reaching 3.1bn by 2028, we’re witnessing one of the most dynamic markets globally.

“This growth brings both opportunities and challenges. While digital payments and emerging technologies like real-time transfers and digital currencies reshape the landscape, success will belong to those who effectively combine innovation with strong execution.

“Companies that strategically invest in their capabilities today while maintaining operational discipline will be the ones who capture this significant market opportunity.”