First Abu Dhabi Bank (FAB) has released Payit, a digital wallet that allows for P2P transfer and international remittances at cheap costs and fast processing time. The bank has also tied up with MoneyGram, which recently had a ten percent stake bought out by Ripple Inc. as reported by Gulf New,s June 30, 2019.
Scope for Digital Payments
In the UAE, nearly seventy-five percent of all transactions are done through cash, highlight the massive potential for digital payments within the region. With the launch of Payit, users can avail a wide range of services to make their lives easier and reduce dependence on cash. On boarding is fairly simple and only requires an Emirates ID, while providing services such as splitting and sharing payments, international remittances, and cash pickups, other than P2P wallet transfers.
As countries continue to push for digital payments, regulatory acceptance is a key driver in innovation and improving services. The UAE government’s push for digital adoption is supported by key legislation passed to promote the use of digital payment mechanisms over cash. The introduction of Value Added Tax (VAT) is also a key driver for the government’s desire to increase the pace of digital adoption.
Merchants tend to prefer cash due to the reduced costs associated with it. The drive by the UAE government and their coordination with banks has been to focus on harnessing the high efficiency and cost reductions associated with digital payments. By fostering further merchant adoption, residents in the UAE will also be incentivized to use digital payments over cash. Payit enables real-time transactions settlement and will provide offers on certain products and merchants to further drive digital adoption.
The partnership with MoneyGram also means that they will be indirectly, or maybe even directly, using XRP to transfer wealth across the globe. This marks a significant achievement for both the banks and cryptocurrencies as a whole, as they continue their quest for global adoption.
The Power of Regulation
It is nothing new to see a governments acceptance of new technologies, leading to the creation of better services for all parties. The problem is getting governments on board with technology that endangers their monopoly over the financial system.
Up till now, the right to issue currency has solely rested with governments. And while Bitcoin wasn’t taken as seriously as it should’ve because of lackluster adoption, the announcement of Libra has finally awoken central banks and governments to figure out the intricacies of digital currencies.