Emerging technologies have had a profound impact on various sectors of economy in the United Arab Emirates (UAE). One of the areas that have been significantly affected by modern technologies is the mode of payment. Ulrich Sen explains that there has been an increasing need to have a safe and easy payment method to facilitate trade and payment of government services (45). The use of currencies has remained popular across the world, but issues about safety and ease of carrying large amounts of money are making this mode of payment less desirable. Various countries have embraced E-currency as a way of improving trade and enhancing the security of buyers and sellers in a market. In the United Arab Emirates, the government came up with e-Dirham, an electronic currency that locals can use to make purchases and pay for government services. The initiative was intended to enable the government achieve its strategic goals by making payment methods simple and safe for citizens. In this paper, the aim is to discuss the financial and economic transition of global governments to an E-currency, especially in the UAE to achieve its future goals. It will involve a case study of Abu Dhabi government entities.
The United Arab Emirates has been successful in its strategy to diversify the economy of the country. The tourism sector, trade, real estate and the financial sectors have become major income sources as the country strives to reduce its reliance on the oil and gas sector. Matsuura explains that one of the challenges that many players in different sectors of the economy often tend to face is the complex payment method that involves cash (78). The author notes that the process of payment usually takes time and may pose serious security challenges for one to make cash payments using the local or foreign currencies. The government, in its effort to address such concerns, introduced e-Dirham to help ease payment methods. It is important to determine if this strategy will help achieve the intended goals of simplifying and enhancing security when it comes to making payments to government entities and trade partners.
Aim and Objectives
The concept of E-currency has gained massive popularity over the past decade as various countries try to make the process of e-payment easier. The United Arab Emirates was one of the first countries to launch an e-payment platform. It is necessary for the government and all the stakeholders to make sure that this payment method is capable of meeting the intended goals. The aim of this research is to determine if the E-currency and new financial methods in governmental entities are able to meet the UAE vision. The following are the specific objectives that the researcher intends to achieve:
- To determine the benefit of the E-currency and related strategies and why they are needed;
- To establish how the E-currency will help on accelerating the achievement of the UAE vision;
- To determine the strategic actions to be adopted when embracing E-currency by governments;
- To determine the challenges and barriers for adopting and implementing new financial methods.
The e-payment platform promises to redefine the mode of payment in the modern global society. The United Arab Emirates was the first Arab country to introduce the e-payment platform. However, other countries are also embracing this new payment method because of its efficiency. The following questions are addressed in order to help achieve the goal of this study:
- RQ1: What is the benefit of the E-currency and related strategies and why they are needed?
- RQ2: How will the E-currency help on accelerating the achievement of the UAE vision?
- RQ3: What are the strategic actions to be adopted when embracing E-currency by governments?
- RQ4: What are the challenges and barriers for adopting and implementing new financial methods?
The Concept of E-Payment
The concept of electronic payment that is also known as digital payment started in the 1990s in the United States. The emergence of internet propelled many financial institutions and experts to find ways through which the new technology could be used in making payments. Many institutions struggled with this concept. Thus, the Stanford Federal Credit Union had a breakthrough in 1994 when it launched online banking services for its customers (Young 112). However, the platform required extensive skills and knowledge of accounting and data transfer protocol. As such, it was not widely used in the United States. However, players in the United States’ financial sector were keen on taking advantage of this new payment method. In 1995, Millicent was launched as a digital payment platform (Ulrichsen 73). One year later, in 1996, the E-cash platform was founded. The emergence of Amazon as an online market platform was a major boost in promoting the popularity of this concept. As Matsuura notes, most of these platforms shared many characteristics such as digital cash or tokens and e-money (86).
According to Young, when PayPal was launched in 1998, it introduced mobile money (98). The company collaborated with eBay to enable customers to make online purchases without visiting the brick-and-mortar stores. The initiative was successful and firm spread its operations to Europe and other parts of the world. Many firms have developed online payment methods, as it has become a major way of making payments. Currently, some of the leading global online payment platforms include Payoneer, Apple Pay, Amazon Payments, Payza, Skrill, Google Wallet and WePay. They offer varying services and charge varying fees. The growing size of the working class who lack time to visit shopping malls has helped in growing the popularity of e-payment methods.
E-Payment in the UAE and Other Arab Nations
E-payment started in the western countries and its popularity has spread to other parts of the world. Most of the nations in the Arab world have embraced this new payment system. Although the conservative nature of the culture in this region have made it necessary to resist most of the western practices, the Arab society has come to realise that e-commerce and digital payment methods are relevant to the business society. E-payment has gained massive popularity in the region. It is important to note that most of the locals in the Middle East and North Africa (MENA) region still rely on international digital payment platforms to facilitate their operations. Payoneer, PayPal, Amazon Payment and Skrill are popularly used in the region.
Some countries have introduced local payment methods specifically designed to meet unique needs of the local stakeholders. In the Kingdom of Saudi Arabia, the government approved the introduction of Mada Pay to facilitate cashless payment for various services and products offered by various entities in the country. It was launched to help the country to realise its Vision 2030. In Qatar, the Commercial Bank of Qatar introduced mobile banking to its customers a more easy payment process. Other cashless payment methods also exist in the country. Such countries in the region as Egypt, Algeria, Bahrain, Iraq, Jordan, Lebanon, Kuwait, Oman, Morocco and Tunisia have unique cashless payment methods besides the international online payment companies. In the UAE, there is the e-Dirham that is expected to revolutionise trade in the country.
E-Dirham in the UAE
Locally in the United Arab Emirates, e-Dirham is set to become a major cashless payment platform that will help promote trade in the country. According to Matsuura, when the government introduced e-Dirham on February 3, 2001, the primary goal was to facilitate collection of government revenues in a secure manner (35). It was meant to be used by the federal government to facilitate the collection of revenues for various services rendered. However, it proved more successful with local governments in constituent emirates, especially in Abu Dhabi and Dubai. It has also become popular among semi-governmental entities and private institutions. The Ministry of Finance has been working closely with the local stakeholders to ensure that this payment method gains popularity among the local people. The direct support that it receives from the government is an assurance that this payment method is not a form of fraud. As such, people tend to trust it.
E-Dirham uses a client card, also known as plastic money, to facilitate payment. An applicant is required to visit the bank or the Ministry of Finance to be issued with an e-Dirham client card. The government processes the application and issues a card with a photo of the holder and a personal identification number (PIN). The client is then expected to fill the card with desired amount of money in the e-Dirham member bank (Ulrichsen 23). When the process is complete, the cardholder can make purchases using the card without necessarily using cash. The initiative was meant to make the payment method for various services simple and more reliable. It was also seen as an initiative that would help combat the growing problem of fake local currencies being used by fraudsters in the country. It was expected that the initiative would make it easy for the country to achieve its Vision 2021-2030.
The United Arab Emirates has been successful in creating an enabling environment for trade. The City of Dubai is currently considered a major international business hub that attracts regional and international players. The Dubai International Airport is one of the most-visited airports in the world and the national airline for Dubai. Emirates Airline is one of the leading global airline companies (Matsuura 54). The real estate and tourism sectors have also been expanding rapidly as the country strives to achieve a highly diversified economy. The initiative of introducing e-Dirham has widely been viewed as a major step in promoting trade in the country. Since handling cash may be challenging in some instances, the initiative is meant to make the payment process to the government and other entities in an online platform easier, without the need to have cash. The government launched e-Dirham in specific areas as it tried to compare the local services with that of the developed nations.
Various government entities have started putting up relevant strategies to help implement the new payment platform in a futuristic manner. As shown in the conceptual framework below (Figure 1), the E-currency is expected to have specific benefits. The E-currency is expected to make payments easier than before when people had to use cash. The method is also believed to enhance safety and security when handling money. The third goal is to ensure that locals have a simple way of carrying money. These benefits will have two major implications as shown in the framework. First, it will promote regular payment of government services. As such, the government, both at the national and local levels, will have enough cash to facilitate government projects. Secondly, the strategy will improve trade in the country. As the size of the working class continues to increase, it is considered that this payment method will promote e-commerce in the country. As Ulrichsen notes, improved payment methods enhance trade (43). These implications are expected to push the country towards achieving its vision 2021-2030.
Previous chapter was focused on the conceptual framework that will guide this study. In this chapter, the aim is to define the research methodology that will be used when conducting the research. As Ahmed et al. explain, it is important to develop a clear research plan that explains steps and processes that will be involved during the research (78). The chapter will briefly describe the research philosophy that will be embraced, approach, data collection method and the sampling strategy that will be used. Data analysis, the expected limitation and ethical considerations are also discussed in brief.
Research philosophy helps in defining the nature, source and development of knowledge, as Adams et al. observe (78). It is important to define the appropriate research philosophy that one intends to embrace as it facilitates in justifying the assumptions that will be made in the study. Ahmed et al. contend that the process of collecting the data from respondents may require a researcher to make specific reasonable assumptions (78). When conducting a major research, defining the research philosophy is the first step that must be made before one can set an appropriate approach and data collection strategy. Depending on the nature of the study, a researcher can opt to use positivism, realism, interpretivism and pragmatism. Each of these four research philosophies will be discussed in details in the final paper before explaining why one of them was chosen to guide the research. The researcher will also discuss the research approach that will be used to facilitate effective data collections. The philosophy and approach will make it possible to develop realistic assumptions in the study. When these steps are addressed appropriately, they will help to develop trustworthy knowledge.
Data Collection Method
The researcher intends to collect data from both primary and secondary sources. Secondary data will be collected from books, journal articles and reliable online sources. Primary data will be collected from a sample of participants. The researcher plans to develop a questionnaire that will guide the process of primary data collection. A face-to-face interview with sampled participants is an appropriate method of collecting data. However, Adams et al. observe that sometimes it may not be easy to reach all participants in person (88). In such a case, the researcher will e-mail questionnaires to them with a guideline of what they are expected to do.
Sampling and Sample Size
In this academic research, time is of great essence. As such, it will not be possible to collect data from everyone who is in a position to provide accurate response to the research questions. Thus, it will be necessary to select a manageable sample size from which data will be gathered. The researcher intends to use simple random sampling to have the right number of participants who will participate in the study. Respondents will include employees at the Ministry of Finance, experts in the field of E-currency and traders. A sample size of 100 participants will be appropriate for the study.
Once data is collected from participants, the next important phase will be to conduct an analysis. The raw information will need to be processed to be meaningful. When studying the financial and economic transformation of the global governments to E-currency, both qualitative and quantitative analysis will be necessary. Quantitative analysis will help to determine the magnitude of the impact. On the other hand, qualitative analysis will provide a detailed explanation of why specific phenomena happened the way they did. The usage mixed method of data analysis will provide a comprehensive understanding of the issue under investigation.
The researcher expects to encounter challenges that will have to be addressed to achieve the set goals in the study. One of the major challenges is identifying appropriate individuals who can participate in the study. They should have the right academic knowledge and experience in this field. Another challenge is that some of them may not be willing to be part of the study. The physical location of some of these participants may also be a major concern in this study. The limited time within which the study has to be completed may also be an issue.
When conducting research, it is important to take into considerations various ethical concerns (Ahmed et al. 67). It is common to encounter various challenges during the process of collecting and processing of data. Such challenges should be addressed in a moral way. One of the ethical concerns will be the need to protect the identity of respondents. According to Adams et al., sometimes an individual may be victimised because of having a divergent view from that of the majority or those in power (45). As such, it is important to ensure that the identity of all participants is protected to avoid such cases of victimisation. The researcher intends to assign each participant a code instead of using the real name. It will be complicated for anyone to trace a participant using their code. The data collected from participants will only be utilised for academic purposes. The researcher will explain the aim of the study to the participants and describe their role in it. The researcher will make the respondents aware that their participation in the study is on a voluntary basis.
Adams, John, et al. Research Methods for Business and Social Science Students. SAGE, 2014.
Ahmed, Vian, et al. Research Methodology in the Built Environment: A Selection of Case Studies. Routledge, 2016.
Matsuura, Jeffrey. Digital Currency: An International Legal and Regulatory Compliance Guide. Bentham Science, 2016.
Ulrichsen, Coates. The United Arab Emirates: Power, Politics and Policy-Making. Taylor & Francis Group, 2017.
Young, Karen. The Political Economy of Energy, Finance and Security in the United Arab Emirates: Between the Majilis and the Market. Palgrave Macmillan, 2014.