UAE's Low-Income Workers Are Ditching Cash As Digital Payments Gain Ground

(MENAFN- Khaleej Times) The UAE's low-income workforce is steadily moving away from cash as digital payments become a more common part of everyday financial life, highlighting a shift in how millions of workers manage salaries, spending and remittances.

Data from payroll card provider C3Pay, which serves around 2.5 million cardholders in the UAE with an average monthly salary of Dh2,032, show that ATM withdrawals have fallen sharply over the past seven years. Cash withdrawals accounted for about 96 per cent of balance usage in 2019 but have dropped to around 69 per cent today, suggesting a growing willingness among lower-income consumers to pay directly through cards and digital channels.

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The trend is significant because low-income expatriate workers have historically been viewed as one of the most cash-dependent segments of the UAE economy. Many have lacked access to conventional banking products, relied heavily on remittances and preferred cash for everyday transactions.

According to Claudio Di Zanni, Managing Director of Edenred Middle East, the definition of being“unbanked” is changing in the UAE.

“Today, a worker with a payroll card, access to mobile payments and the ability to remit money digitally may technically remain outside traditional banking, but is by no means excluded from the financial system,” he said.

The shift is being driven by several factors, including wider acceptance of digital payments across retail outlets, growing smartphone penetration and the convenience of avoiding ATM withdrawal fees or carrying large amounts of cash.

Younger workers are playing an important role in accelerating the transition. Having grown up with smartphones and digital services, they are often more comfortable using mobile applications, card payments and digital money transfers than previous generations of migrant workers.

“The younger generation is generally adopting digital financial services more readily than expected, given their familiarity with mobile technology and digital ecosystems,” Di Zanni said.

However, the move towards digital payments does not mean cash is disappearing. Many workers still withdraw a substantial portion of their salary for budgeting purposes, to send money home through familiar channels or because cash remains accepted and trusted in their social circles.

The spending patterns of lower-income workers also reveal a strong focus on essential needs. According to Edenred's data, most expenditure is directed towards groceries, remittances, transportation, telecommunications and accommodation-related costs. Discretionary spending accounts for a significantly smaller share of monthly budgets.

Financial behaviour among this group reflects a strong emphasis on value and predictability. Even relatively small charges can have a meaningful impact on disposable income, making transaction costs and remittance fees an important factor when choosing financial services.

Industry observers say these changes challenge long-held assumptions about financial exclusion. Traditional measures often classify individuals as unbanked if they do not possess a conventional bank account, but the rapid growth of payroll cards, e-wallets and digital payment platforms is creating a more nuanced picture.

“Many financial institutions still think of the unbanked as financially disconnected, but the reality is more complex,” Di Zanni said.“Digital tools are allowing people to participate in the financial system without necessarily following the traditional banking path.”

The findings come as the UAE continues to push a broader digital economy agenda, encouraging electronic payments across both government and private-sector services. Fintech firms, exchange houses and payment providers have expanded offerings aimed at workers earning lower wages, making mobile-first financial products more accessible.

Experts say the next phase of financial inclusion in the UAE is likely to focus less on account ownership and more on access to affordable and useful financial services. That could include low-cost remittances, savings tools, micro-insurance products and digital credit solutions tailored to workers who have traditionally been overlooked by mainstream banks.

The decline in ATM withdrawals suggests that for many of the UAE's lower-income residents, financial inclusion is no longer simply about gaining access to banking services. It is increasingly about how digital tools are reshaping everyday money management, one transaction at a time.

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