Gulf states’ cashless vision is a smart economic bet

The Gulf region is undergoing a quiet but significant transformation in the way money changes hands. Across the Gulf Cooperation Council, governments are steadily pushing their economies toward a cashless future in which most transactions are digital, instant and transparent. This shift is turning out to be a strategic economic decision that could strengthen the region’s long-term competitiveness.
In common with many other countries, Saudi Arabia, the UAE and other Gulf states are embracing new payment technologies for convenience. In the process, they are building a digital financial infrastructure that could drive the next phase of economic growth. For countries seeking to diversify beyond hydrocarbons, the cashless transition is proving to be a smart bet.
Saudi Arabia offers the clearest example of how quickly this transformation is taking place. Under Vision 2030, the Kingdom set a target of increasing noncash retail transactions to 70 percent. This was achieved in 2023, with digital or cashless transactions in retail rising to 79 percent in 2024.
As recently as 2014, most transactions in the Kingdom were still conducted in cash. Today, contactless cards, digital wallets and mobile payment platforms dominate everyday purchases, from groceries and taxi fares to electricity and telephone bills.
In the UAE, old-fashioned people complain about the difficulty of changing a 10-dirham note for two fives because most shops and eateries no longer keep loose change. Dubai recently announced a strategy to make 90 percent of transactions cashless this year, positioning itself as one of the world’s most digitally sophisticated commercial hubs.
Across the broader GCC, digital payments are expanding rapidly. The total value of digital payments in the region is expected to continue to increase thanks to government initiatives and rapid consumer adoption.
Why does this matter? Because payments are like the circulatory system of an economy. The faster, safer and more efficient that system becomes, the stronger the economy tends to be.
One of the biggest advantages of a cashless economy is efficiency. Handling physical money is quite costly. Cash must be printed, transported, stored and protected. Businesses must reconcile their tills and banks must manage the logistics of cash distribution. Digital payments eliminate much of this cost and inconvenience.
For consumers, the benefits are even more obvious. Paying with a phone or card is quicker and safer than carrying large amounts of cash in physical wallets or handbags. Digital payments also fuel the expansion of online commerce. This is critical for Gulf economies that are investing heavily in e-commerce, logistics and digital services.
A cashless system also improves transparency. Digital transactions leave a clear record, which helps reduce tax and VAT evasion, corruption and the shadow economy. Governments can track economic activity more accurately and design better policies as a result. 

The faster, safer and more efficient the payment system becomes, the stronger the economy tends to be.

Arnab Neil Sengupta

Another powerful effect is the boost financial innovation gets. Experience shows that once payment systems become digital, an entire ecosystem begins to grow around them. Fintech companies develop new services such as digital wallets, “buy now, pay later” financing, micro-loans and real-time transfers. Banks adopt digital platforms that allow secure connections between financial institutions and technology companies.
Saudi Arabia has already begun to see these benefits. The rapid growth of fintech startups, digital banks and payment platforms is turning the Kingdom into one of the most dynamic financial technology markets in the Middle East.
There is also a broader dimension to the transformation. The Gulf states are competing to become global hubs for trade, tourism and investment. In an age when consumers increasingly expect seamless digital services, modern payment systems have become today’s equivalent of ports, airports or broadband networks.
For tourists and international businesses, the ability to pay instantly with cards or mobile wallets can make a destination more attractive than one where they have to lug around wads of cash. A cashless ecosystem is an indicator of an economy that is technologically advanced, well regulated and business friendly.
Of course, the transition to a cashless economy is not without its challenges. Cybersecurity is the most obvious concern. As financial systems become more digital, they can also become targets for hackers or fraudsters. GCC governments and financial institutions must continue to invest heavily in security to maintain trust.
Another challenge is inclusion. Some older citizens or low-income migrant workers may not be comfortable using digital payment tools. Ensuring that everyone can participate in the new financial system requires education, accessible banking services and affordable smartphones.
Privacy concerns also deserve careful consideration. While digital payments increase transparency, they also generate large amounts of data about individuals’ spending habits. The onus is on policymakers to ensure that this information is protected and used responsibly.
Fortunately, these challenges are manageable and the Gulf states appear well aware of them. In recent years, central banks in the region have taken numerous steps to regulate fintech, strengthen payment infrastructure and ensure consumer protection.
It is also important to recognize the geopolitical context in which the transition to a cashless society is taking place. The Middle East continues to be a volatile region and the current spate of unprovoked attacks by the Iranian regime on Gulf states will surely influence public policies in the years to come.
But the cashless vision being pursued by Saudi Arabia and its neighbors is essentially about the economic landscape that will emerge after today’s conflicts eventually subside. Building modern financial infrastructure is vital for Gulf economies to be ready to thrive in the postconflict era.
To sum up, the push toward a cashless economy is part of the GCC bloc’s broader strategy to build diversified, resilient and globally connected economies.
Oil wealth built the foundations of prosperity in the past. Digital and “intelligent” infrastructure — including cashless payments — may well underpin the prosperity of the future.

• Arnab Neil Sengupta is a senior editor at Arab News.
X: @arnabnsg