The future is coming
and it’s cashless

Cashlessness – an absolute priorityby Maki Vekinis

Let’s think for a moment about what the term cashlessness means. Do you use cash a lot? Do you always like having cash on you? How would you feel about a cashless world?

Globally, we still use cash for most of our payments. Some 85% of purchases and payments are still made in physical cash around the world, but in some countries this has been reduced significantly, by half in a few notable cases.

Of course cashless transactions were in use a long time before the digital solutions that are now part of our lives. Millenia in fact - the barter system goes back 6000 years, introduced by the Phoenicians in Mesopotamia when one form of goods was exchanged for another at an agreed “exchange rate”.

But cashlessness – meaning being able to make purchases and payment without needing physical cash - has some very interesting features and implications which are of increasing relevance to the world we live in today.

One is security. Despite the fact that the quality of life we have is generally improving, in terms of standard of living, life expectancy and general availability of healthcare, not to mention the technology we have that makes everything so much easier and more efficient, safety and security is still a major global issue. The fact that payments can be made in cash that are not traceable is a real threat to security. While privacy is often used as an argument in favour of cash payments, there is little doubt that anonymous cash helps to keep the organisations behind the attacks we have been seeing in the UK and elsewhere in the past few weeks in business.

Another feature of cashlessness is that the more we move into the era of credit cards, debit cards, and payment systems by such companies as Apple, Samsung, Mastercard and Visa, the more we exclude the millions and millions of people who do not have access to such things. These are the unbanked, who are condemned to use cash as they have no alternative. We have over a million of these in the UAE alone.

Cash is also useful in many countries as a means of avoiding paying taxes, as the transaction goes unrecorded. Of course income tax is not levied in the UAE, but VAT will soon be so this argument is also soon to resonate here.

Mastercard has done a lot of work in helping to introduce cashless systems around the world. In their global study issued in 2016 they noted that “the persistence of cash is surprising given the inconveniences and the risk of carrying it around. Electronic payments, by contrast, are proven to boost economic growth while advancing financial inclusion. For those reasons, countries are working to make payment systems less dependent on cash. By several measures, they are making progress.”

So for example Singapore, Netherlands, France and Sweden have achieved a level of around 60% of their consumer payment transactions using non-cash methods. Interestingly, Italy, Greece and Mexico lag behind at or below 6%, and the UAE is at 8%.

In fact, cashlessness has some very definite upsides. As Mastercard point out, the less physical cash is used in transactions the more efficient an economy becomes. One of the ways this works is as I have mentioned to make sure that all transactions are recorded. But another key benefit is to the financial system itself. Cash is a burden on banks as it needs people, security, machines and suppliers to keep it flowing. It is also a burden on shops who then have to secure and deposit it.

This is one of the reasons why 16 of the UAE’s leading local banks are behind the Emirates Digital Wallet, which aims (when it is launched at the end of the year) to pave the way for cashless spending, transfer and storage of money for everyone living and working in the UAE. They see the argument in favour of reducing and ultimately minimising its use.

So what are we still using cash for? Mostly it is when someone won’t or can’t accept anything else. This goes for taxis, small shops, hairdressers, pocket money for the kids, and buying small items at larger shops. But what if the corner shop wants payment in a way that enables them to pay their suppliers, their staff, and their utility companies without the hassle or risk of cash? What if the staff who receive their salaries want it in a way that they can use everywhere else, without cash?

Receiving cash is not so much the ideal situation for the shop owner or taxi driver, the hairdresser or the pizza delivery guy, but the only one for now that is free, easy and dependable. But it is not the solution that gets their money safely into a bank account, that allows them to use the money received to make immediate payments to people they are not planning to meet anytime soon, or provides them with a built-in record of payments received. With VAT on the horizon, this latter feature is going to be an absolute priority for them.

Maki Vekinis is the General Manager of Emirates Digital Wallet

EDW Media Briefing – 30 April 2017Opening Statement by Maki Vekinis

Good morning everyone, and thank you for coming to this briefing on the Emirates Digital Wallet.

We are doing this today, as tomorrow we are making our first public appearance – at the Seamless Middle East conference here at the International Conference Centre in Dubai.

I wanted to give you the chance to find out why this project is so important to the UAE, as well as who we are and what we aim to achieve. I can tell you, it’s very exciting.

So, allow me to explain some basic things about Emirates Digital Wallet first, and then we can go into questions and answers.

I am delighted to have been asked to be the first General Manager of Emirates Digital Wallet. In many respects it feels as though my 30 year career in banking has led me to this point.

I have spent many years working in transactional banking, trying to find ways to make it easier for customers to get what they want from their banks, and for the banks to deliver that as effectively and efficiently as possible.

It seems to me that while the world has made so many major and hugely significant strides in science, technology, medicine, engineering, and so on, we have not managed to reflect this progress in how we behave with money.

We still use cash, even when we don’t write letters anymore, we don’t put film in cameras, we don’t buy records or videos, and sooner rather than later we won’t even drive cars.

Cash is a problem. It is inefficient, cumbersome, risky, and expensive to use. It needs security, transportation, and constant replacement and renewal to beat the counterfeiters.

Enter Emirates Digital Wallet. This is a unique new way of using money. It means cash in your pocket, but without the physical cash.

Emirates Digital Wallet is an undertaking with 16 of the UAE’s leading banks. They are all shareholders in the company. It has been developed in partnership with EDC (Electronic Documents Centre – a joint venture between Emirates Post Group and ABBA Electronics) who is working with Master Card to deliver the service. Mastercard is a global leader in creating and operating payments systems around the world.

It combines many of the features in the world of best practice in digital payments. But it is unique in that it has been built from ground up in co-ordination with the government, and it is unique because of its ownership by most of the UAE’s leading banks. It is unique because it allows vendors to receive the payment instantly, and it is unique in that it is free and you don’t need a bank account to use it.

It is also unique because it will be regulated by the UAE Central Bank and indeed the rules on electronic payments and stored value (issued on 1 January) have been written around the concept of the digital wallet.

Ladies and Gentlemen

The purpose of the Emirates Digital Wallet is to enable the UAE to be at the forefront of finance in the 21st century. It was created to support the UAE’s smart government initiative launched in 2014, and it also aims to help the country’s 1.3 million unbanked adult residents be properly included in the financial sector.

But why would banks want this? Surely they depend on cash flowing around the economy?

Well, actually they don’t. They have to issue and receive physical cash, run ATMs, store and transport it safely. They have to replace damaged and out of date cash, and they need to employ more people and external suppliers to do this. Less physical cash for banks is actually a good thing.

This is why 16 of them have invested in Emirates Digital Wallet. They will get a return on their investment, possibly within 4 or 5 years, but they will also realise significant savings in costs from the reduction of cash payments and withdrawals.

As I said, Mastercard is our operational partner as they are head and shoulders ahead as providers of payment solutions around the world.

Mastercard are now well down the road in creating a model which will make the UAE proud.

Through our bank partners, who represent most of the merchant acquires in the country, we will introduce Emirates Digital Wallet to tens and then hundreds of thousands of outlets in the UAE.

We expect to be able to see an initial roll out of the app for use in around October or November this year with the entire system going operational early next year.

Then you will be able to forget about cash. For ever.

Thank you. I am happy to now take your questions.

Cash in your Pocketby Maki Vekinis

An article with this title is very likely to catch your attention. And it has, apparently.

More than likely it is because we as humans have such a strong emotional bond with cash. Depending on where you are and how old you are, cash represents wealth, security, access to society, and sometimes even health. But cash has its downsides, some of them of serious concern to policy makers and law enforcement officials.

This is why the UAE has decided to go beyond cash, and with the Emirates Digital Wallet has developed a globally unique way of doing so.

Cash costs money, to produce, protect, transport and handle. It also sits – in very large quantities – unproductively outside the active economy, sometimes for long periods of time. According to statistics published by the Central Bank of the UAE, at the end of March AED 65.4 billion was in circulation outside banks in the UAE, or AED 7,000 for every resident of the UAE, in cash.

But there is another, more personal, issue at play here. As a society today we are ready adopters of technology solutions that make our lives easier or more fulfilling. Just think what you can do with your smartphone, far beyond it being a telephone. It has so many built-in and app-driven solutions that help us take and share photographs, communicate, navigate, purchase, read, and explore. If these days we don’t put film in cameras, use CDs and DVDs, printed air tickets or maps, and sooner rather than later we won’t even need to actually drive a car, why would we want to still carry around notes and coins that have their origins centuries ago?

This is a question that is having an increasing resonance around the world. The cashless society to all intents and purposes is beginning to take shape. We have credit cards, debit cards, internet payment cards, proximity payment cards, and loyalty cards that can all be used instead of cash. But none of them behave intrinsically as cash, and are largely driven by specific entities for their own ends.

In his book “The Curse of Cash”, eminent economist and academic Kenneth Rogoff covers a myriad of macro-economic downsides to cash, but makes another key point about the role cash plays in the global economy. “There is little question that cash plays a starring role in a broad range of criminal activities, including drug trafficking, racketeering, extortion, corruption of public officials, human trafficking and of course money laundering”, he says. Rogoff, who is Professor of Public Policy at Harvard University and former Chief Economist of the IMF, goes on to say that cash also plays a large part in illegal immigration, which could be dealt with by making it impossible for employers to pay illegal immigrants in cash.

As we saw in India and Europe last year, some leaders see these problems being serious enough to actually withdraw large denomination notes from circulation, whatever the inconvenience to the population as a whole.

The Emirates Digital Wallet is a unique solution to this conundrum, and later this year it will make its entrance with its own brand name in the UAE.

Unique is admittedly an over-used term, but in this particular case it is the right one. Emirates Digital Wallet is a company jointly owned by 16 of the UAE’s largest local banks. Apart from its main purpose of replacing cash in the system, one of its prime objectives is the reduction of financial exclusion in the country, which means effectively the unbanked (since you don’t need a bank account to use it). It will be free to use for both the consumer and the merchant, and it allows the recipient of the payment to use funds received immediately.

So, what do we really mean by cash in your pocket?

Despite the many ways that we now pay for things or send money somewhere, cash still has a significant place in society. Here in the Middle East it is used more than, say, in Europe or the United States. This is partly because there are costs associated with the other payment methods a lot of the time, but it is also because many residents, for instance here in the UAE, are used to carrying large amounts of cash with them. However, many non-nationals do not have access to a bank account, because they do not earn enough. There are up to 1.3 million of these, and they have to operate in cash, with all the risks of doing so.

The tipping point is when something disruptive – meaning when it changes behaviour – catches on to such an extent that it effectively replaces what came before. We have seen this with smart phones, with how news is delivered, with how people keep in touch with their friends and family, and in some parts of the world we are now seeing it being used even for ordering and delivery of groceries.

The tipping point will come in the UAE when users realise how carrying cash is simply not required or desired any more. Or as Kenneth Rogoff says, “The massive quantities of cash circulating today, and especially large denomination notes, are a huge public policy problem that needs to be urgently discussed, not taken as an immutable fact of life”.

The UAE is proud to be taking the global lead on this issue with Emirates Digital Wallet.

Maki Vekinis is the General Manager of Emirates Digital Wallet.

Emirates Digital Wallet Launched at Seamless

Dubai, 1 May 2017: Emirates Digital Wallet, a unique platform established by 16 of the UAE’s leading banks, has been formally launched at the Seamless Middle East conference on 1 and 2 May in Dubai.

Emirates Digital Wallet paves the way for cashless spending, transfer and storage of money for everyone living and working in the UAE. It brings together best practice from a wide variety of payment systems around the world, and provides a unique solution tuned in to the needs and characteristics of the UAE’s local environment.

The new system, to be rolled out as an app from the last quarter of this year, provides a free to use, highly convenient, safe and efficient way of making payments without the use of physical cash. It responds to the UAE’s smart government initiative by providing a simple to use and interconnected payments platform using smartphones and other handheld digital devices.

Emirates Digital Wallet has been developed over the past two years under the umbrella of the UAE Banks Federation, which created a special committee for its member banks to contribute ideas and suggestions to and formulate the ideal solution for the United Arab Emirates. The UAE Central Bank has also played a crucial role in providing advice and guidance on how the platform should be constructed and operate to meet the highest regulatory standards.

Maki Vekinis, General Manager of the Emirates Digital Wallet, says: “This is an exciting and ground breaking project for the UAE. While there are many payments solutions using new technology out there, none have the buy-in of leading national banks, none have been constructed from the ground up in co-ordination with government, and none allow instant transfer of cash to vendors.

“What we are creating is a new cash for the 21st century, cash that does not need a visit to an ATM, or cash that does not fill your pocket or wallet. This is a new movement both to reduce and ultimately eliminate cash from the system, and to allow even those without bank accounts to enjoy the convenience, security and peace of mind of having cash without the physical frustration and risks it often entails.”

Emirates Digital Wallet LLC has been incorporated as a company and has a 9 member Board of Directors representing its shareholder banks. Its Chairman is Mohammed Al Jayyash, Chief Service Officer of Abu Dhabi Commercial Bank. It is working with EDC (Electronic Documents Centre – EDC, a joint venture between Emirates Post Group and ABBA Electronics) who has partnered with Master Card to deliver the service. Mastercard is a global leader in creating and opereating payments systems around the world.

Maki Vekinis adds: “We have selected Seamless Middle East as a milestone for the roll out of the Emirates Digital Wallet because of its focus on Payments , Ecommerce and Retail in the region. This conference provides a very fertile environment for us to introduce the system to many of our key stakeholders and partners of the future.”

The trading brand for Emirates Digital Wallet will be announced in the near future.

For more information, please contact Steve Martin tel 054 4497297

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Notes for Editors

Emirates Digital Wallet

Emirates Digital Wallet is a digital solution which allows payments to be made and accepted, and funds to be stored or transferred through a single platform. It aims to promote financial inclusion and to reduce the amount of physical cash circulating in the economy. It is the financial component of the smart government initiative launched in 2014 to provide the best services to the UAE people round the clock, and to help improve their quality of life and happiness.

Emirates Digital Wallet LLC is owned by 16 of the UAE’s leading national banks and governed by a Board of Directors representing 9 of them. Its Chairman is Mohammed Al Jayyash, Chief Service Officer of Abu Dhabi Commercial Bank, and its General Manager is Maki Vekinis, previously Head of Global Transaction Services at Abu Dhabi Islamic Bank. It will be regulated by the UAE Central Bank in accordance with rules on stored value and electronic payment systems published on 1 January 2017.

Maki Vekinis

Maki Vekinis, the first General Manager of Emirates Digital Wallet LLC, is a career banker who for most of his 30 years in the industry has championed the use of technology in banking particularly through mobile and internet channels, and has sought to make products such as remittances, payments and collections fit for the 21st century.

He has held senior roles in a number of regional banks, spearheading migration to technology driven solutions. His passion has been to utilize technology to close the gap between banks and customers - individuals or businesses - devising and rolling out intuitive solutions, ultimately creating a technology driven financial services environment.

For 6 years prior to his appointment with Emirates Digital Wallet he was EVP, Head, Global Transaction Services and Financial Institutions at Abu Dhabi Islamic Bank. In this period he established and managed the bank’s Global Transaction Services unit, rolling-out innovative Islamic solutions to Government, Corporate, Commercial and SME customers throughout ADIB’s network. He led the committee set up by the UAE Banks Federation to create the Emirates Digital Wallet.