Real-Time Payments in the United Arab Emirates

Real-Time Payments in the United Arab Emirates

In the era of rapid technological advancements, the United Arab Emirates (UAE) has positioned itself at the forefront of embracing real-time payments, revolutionizing the way of financial transactions are conducted in the country. The Central Bank of UAE (CBUAE) announced the Instant Payment Platform (IPP) initiative of the UAE  which is a part of the National Payment Systems Strategy (NPSS) and planned to be fully activated in three phases in late 2023.

What is the Instant Payment Platform (IPP)?

The Instant Payment Platform (IPP) represents a cutting-edge system that enables individuals and businesses to execute transactions instantly, regardless of time or day. It is a strategic part of the move by the UAE towards a cashless society as the platform operates advanced technology to facilitate real-time fund transfers, allowing users to send and receive payments in a matter of seconds. IPP offers a secure, efficient, and convenient tool for conducting financial transactions by simply removing the delays experienced with traditional payment methods.

The implementation of IPP has resulted in several important benefits for the UAE. First of all, it has enabled individuals and businesses to achieve a fast and smooth payment experience, boosting productivity and convenience. Whether it is paying bills, transferring funds, or making purchases, IPP empowers users to complete transactions in real-time, supporting the move towards a cashless society.  This has simplified the payment process up to a great extent and increased financial flexibility both for customers and businesses. Consequently, IPP will deliver the flexibility needed to respond to the rapidly changing payment market while complying with best practices and international standards, including ISO20022.

Additionally, the digital transformation of the UAE’s economy is reinforced with the  adoption of IPP as a result of the RTPs becoming an internal part of the country’s evolving digital infrastructure and promoting innovation and economic growth. The availability of instant transactions also supports businesses with possibilities of streamlining operations, cash flow optimization, and quickly acting upon market demands. This drove the development of e-commerce and digital marketplaces, expanding economic diversification and positioning the UAE as a global hub for digital commerce.

What is The National Payment Systems Strategy (NPSS)?

The National Payment Systems Strategy (NPSS) is an extensive framework created by the UAE government to enhance the efficiency, security, and strength of the country’s payment systems. Acknowledging the strategic importance of renovating payment infrastructure, the NPSS draws a roadmap for the adoption and implementation of innovative payment solutions, including real-time payments.

The primary aim of the NPSS is to create a strong payment ecosystem that conforms with international standards and best practices. It takes a collaborative approach and focuses on bringing together different stakeholders including government entities, financial institutions, technology providers, and consumers. By supporting collaboration, the NPSS targets to address the problems related to traditional payment systems and form a modernized, secured, and inclusive payment landscape.

Among the other purposes of the NPSS, there is also the mission of building a secure and interoperable infrastructure to enable seamless transactions across different banks and financial institutions. This infrastructure will act as the basis for real-time payment transfers, allowing individuals and businesses to transfer funds instantly. The implementation of industry-wide standards and protocols increases the interoperability and reliability of the payment ecosystem, making transactions more efficient and secure.

Encouraging consumer awareness and adoption of real-time payments is also an essential focus of the NPSS. The strategy puts the emphasis on the use of digital solutions such as digital wallets and mobile banking apps to improve convenience and encourage a cashless society. In order to increase the trust and confidence of the consumers in real-time payments, the UAE government organizes public awareness campaigns and educational initiatives.

The UAE’s Real-Time Payments Strategy

The UAE’s real-time payments strategy is formed with a multi-layered approach to revolutionize the country’s payment landscape and embrace the potential of real-time payments completely. The strategy prioritizes creating a secure and interoperable payment infrastructure which means collaborating with banks, financial institutions, and payment service providers to develop a strong network that enables seamless and instantaneous transactions. The UAE government makes sure to keep close relationships with these entities so that the payment infrastructure is equipped with strict security standards, safeguarding against potential risks and threats.

Apart from infrastructure development, the UAE’s real-time payments strategy also promotes innovation and collaboration within the financial ecosystem. To that end, the government actively encourages fintech startups, technology companies, and financial institutions to work together and develop new payment solutions that boost real-time capabilities. The ultimate purpose of the UAE is to attract global players, improve technological advancements of the payments industry, and position itself as an important location for fintech and digital payments.

Financial inclusion and accessibility are also within the scope of the UAE’s RTP strategy. The UAE government wants to ensure that real-time payments are available to all parts of society, including individuals with limited access to traditional banking services. To close the digital gap and empower individuals with financial inclusion opportunities as much as possible, the UAE government promotes the utilization of digital wallets, mobile banking, and other user-friendly interfaces.

Moreover, the UAE’s real-time payments strategy highlights the importance of international collaboration and integration. The interoperability between the RTP systems of the UAE and other states is a part of UAE’s strategy as it recognizes the global nature of finance and international transactions. By forming strategic partnerships and sticking to international standards, the UAE can assist in seamless cross-border transactions, promote international trade, and enhance the country’s position in the global economy.

Real-time payments have emerged as a game-changer in the United Arab Emirates, reinterpreting the way financial transactions are conducted. The Instant Payment Platform (IPP) and the National Payment Systems Strategy (NPSS) have played critical roles in driving this transformation. Through its inclusive real-time payments strategy, the UAE focuses on strengthening its position as a global leader in digital payments, driving economic growth, and leading the way to a new era of financial inclusion. By adopting real-time payments, the UAE has demonstrated its commitment to embracing technological innovation, enhancing financial efficiency, and improving the overall payment experience for its citizens and businesses.

Serkan Arslan, CAMS, Sales & Business Development Director

Financial Messaging