A new study from Visa, the SME Megatrends Report, looks at the ever-evolving small and medium-sized enterprise (SME) landscape in the United Arab Emirates (UAE).
As SMEs undergo significant change, particularly in the digital and financial space, the report highlights how underwriters can leverage enterprise needs and challenges to unlock new revenue opportunities, gain a competitive advantage and enhance SMEs’ growth and scalability prospects influence.
Regulatory policies, funding and digital transformation initiatives and more are improving the local business landscape and driving new opportunities for businesses in the UAE. In such a dynamic environment, SMEs are quickly leveraging digital potential by expanding their online presence to attract new customers, adopting contactless and digital payments to stay competitive, and integrating digital business tools to optimize business operations.
The rapid acceleration of digitalization in the region’s medium-sized businesses offers central banks a wealth of new income opportunities. By facilitating access to essential financial products and services, banks can harness this potential, resulting in an expanded customer base, higher transaction volumes and better revenue prospects. By working with Visa, underwriting banks can offer tailored financial products tailored to the specific needs of SMEs to actively promote inclusive economic growth.
Salima Gutieva, Vice President and Country Manager for the UAE at Visa, noted: “At Visa, empowering SMEs is not just about enabling transactions; It’s about enabling transformation. SMEs are the backbone of economies worldwide and play a crucial role in driving growth, innovation and employment. In a rapidly changing environment, it is essential for underwriters to clearly understand their needs and develop targeted solutions that advance the SME sector.”
“We are confident that the SME Megatrends report will help underwriters better tailor their offerings to the needs of SMEs in the market. By identifying opportunities for issuers to provide essential financial products and services to SMEs, Visa aims to collectively promote economic growth. These efforts not only support the development of SMEs, but also contribute to new channels of prosperity and provide significant benefits to the economy as a whole.”
The key identified SME megatrends in the UAE include:
Greater desire for a streamlined banking experience: Although banks in the UAE have taken significant steps to improve the process of opening a bank account for SMEs, it can still be a challenging and expensive affair.
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, difficulties in providing collateral, interest rates and administrative hurdles. The government is actively working to support SMEs through regulatory changes and development funds in line with the UAE’s 2030 vision.
Integration with social media platforms: SMEs are increasingly using social media and e-commerce platforms to expand their marketing presence and tap into the digital economy.
Contactless payments play a growing role in SME digitalization: As mobile payments and digital wallets grow alongside changing consumer behavior and payment patterns, 49% of SMEs in the UAE are embracing contactless payments as a key area of investment to meet customer expectations. There has been a massive increase in the use of digital payments in the UAE, with in-store digital contactless transaction penetration reaching over 90%.
Increased trend towards digital payments, away from cheques: Although checks are still widely used in the UAE, SMEs are moving towards cheaper and faster digital payment options, demonstrating the demand for solutions such as Tap to Phone and Visa Direct for cross-border transactions.
Investment in SMB digitalization tools is increasing: SMBs are increasingly using invoicing and expense management platforms to digitize financial processes and digital accounting software, although 74% of SMBs still rely on manual processes and basic communication tools.
Growing interest in providing better employee benefits: In the competitive UAE market, 86% of companies would offer additional employee benefits if it were more affordable to attract and retain top talent.
Strengthen the ecosystem, drive growth
Visa recognizes the critical 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 pay, including Visa Business credit and debit cards, rewards programs, business and payment management tools (including virtual cards), fraud and security services, and product solutions such as Tap to Phone and many others Solutions. Digital payment technology is expected to be the foundation for business growth. 95% of SMEs accept that the value received is equal to or greater than the price paid to set up digital payments, and more than 7 in 10 merchants consider such an investment to be business critical.
Visa has digitally empowered nearly 67 million SMBs worldwide, leveraging its deep expertise and partner network. Visa exceeded our three-year goal of digitally empowering 50 million SMEs worldwide. This success underscores Visa’s extensive expertise and the strength of its partnerships. Visa empowers SMBs through platforms such as She’s Next, a global advocacy program for women entrepreneurs, and the Visa Everywhere Initiative for fintech startups. Visa also offers financial education and business skills training, including Practical Business Skills, a global digital platform that provides free educational resources.
Understand how issuers can capture new opportunities in the UAE’s SME landscape by expanding and adapting corporate financial products and services.