Small and medium enterprises (SMEs) in the UAE are turning to digital payment apps as an affordable and efficient alternative to traditional point-of-service (POS) terminals, which often come with high costs and extensive requirements. This shift is helping businesses overcome payment challenges, particularly for entrepreneurs like university students and small-scale vendors.
Challenges with Traditional POS Systems
For years, SMEs have relied on cash transactions or lengthy bank transfers due to the prohibitive costs of POS systems. A typical terminal costs thousands of dirhams, requires a business license, and involves recurring fees—barriers that many small businesses, particularly student-run or event-based ventures, struggle to meet.
Shawki Zaitoun, a 20-year-old student at the American University of Sharjah (AUS), experienced these challenges firsthand. While managing his perfume brand, Wardlak, he realized that relying solely on cash payments would hurt his business, as most students seldom carry cash.
“Based on my experience from previous events, most students don’t carry cash. If I had relied on that alone, I wouldn’t have broken even,” Zaitoun explained.
Embracing Digital Payments
Zaitoun’s business transformed when he adopted a digital payment app. Customers welcomed the convenience, and the young entrepreneur appreciated the flexibility it offered.
“Most purchases are already cashless, and I believe that will be the norm at some point,” he said. Zaitoun also noted the benefit of avoiding the risks associated with expensive physical card readers, recalling an incident where his venue was damaged during an event.
How Digital Payment Apps Work
Digital payment apps streamline transactions, allowing businesses to accept payments without the need for a physical terminal. Typically, the process involves:
- Setting Up: The business owner downloads the app and creates an account.
- Generating Payments: They create an invoice, which the app converts into a payment link or QR code for customers.
- Transaction Completion: Customers use the link or scan the QR code to make payments, which are deposited directly into the business account.
A Game-Changer for Small Vendors
For Myrna Fandy, founder of the hijab brand Wove, digital payments also proved invaluable. Initially, Fandy struggled with customers asking for card payment options and faced issues with delayed withdrawals and customer support from other platforms.
Switching to a recommended app during her pop-up events resolved these challenges. Despite initial hesitance from customers unfamiliar with the app, she observed a significant boost in sales.
“Buying a card machine was such a hassle. Getting paper, maintaining it, and dealing with banks—it’s too much,” Fandy said.
The Cashless Future
Both Zaitoun and Fandy believe the UAE’s transition to digital transactions is inevitable. “My friends and I, even my father, we never carry cash,” Fandy added, reflecting the changing consumer habits driving this shift.
Digital payment apps are proving to be not just a solution but a necessity for modern SMEs, paving the way for a cashless economy in the UAE.
