Emirates ID system a foundation for a first-if-its-kind national ePayment system

The Emirates Identity Authority has stressed that its advanced ID management system developed over the past few years will form a foundation for a national ePayment system with more secure and more comprehensive features, introducing a first-of-its-kind model at global level. 

In a new paper published by the Advances in Social Sciences Research Journal (ASSRJ), Emirates ID emphasized that the UAE’s smart ID provide advanced capabilities ranging from encryption, digital signatures, and strong authentication mechanisms. “Thus, the use of the government identity management infrastructure is likely to become an integral part of the electronic payment systems in the UAE in the few years to come,” it added.

In the paper entitled “Electronic Payments: Building the Case for a National Initiative”, Emirates ID pointed out the need for the government to consider legal protection as credit and debit cards do, especially when it is evident that alternate payment mechanisms will become dominant in the near future as digital cash overtakes physical cash.

The paper, prepared by Dr. Ali Mohamed Al Khouri, Director-General of Emirates ID, threw light on the ePayment systems and their connection to the economic developments in the UAE, which had made strides in the transition into the digital economy, highlighting the role of the identity management infrastructure developed by Emirates ID in building a secure and reliable ePayment system in the country.

In its paper, a copy of which is available on its website www.emiratesid.ae, the Authority underlined that the explosion of the internet and mobile phones, as well as the other technological developments has significantly influenced momentous changes in the payments market, particularly the electronic one.

“The key drivers for the revolutionary speed in developments in the digital payments field are intrinsic in the cost and risks associated with handling physical cash. This has the potential to lead the development of more sophisticated and more efficient digital services,” the Authority underscored.

The paper explored several international studies and reports about ePayment showing that the cost associated with handling physical cash could reach to a record amounts. “The European Payments Council estimates that the European Union's €360 billion in cash transactions cost at least €50 billion a year,” it clarified.

The paper referred to a study that estimated the cost of handling cash in Germany at Euro 12.5 billion per year, while another study estimated that the average cost of payments in Europe is approximately 1.2 per cent of the GDP. However there is huge variation in this with payments costs ranging from 0.6 in the most efficient country in Europe to 1.6 per cent for the least efficient, the study said.

The paper also highlighted a recent study by Asian Bank which identified the cost and security as the primary factors associated with cash handling as cost is considered the key concern for banks in the mature markets, but security was perceived as more important in emerging countries.

“Today, the technology of money is racing to catch up to social changes that have radically altered how we interact. It is impossible to say what the unintended consequences of innovations in financial technology will be; we can only note that they will come and we can only make some intelligent guesses,” the study concluded.

The UAE had recently tested the possibility of using the ID card in ePayments in cooperation with Network International. The test proved the Emirates ID card’s capability as ePayment tool in several online financial transactions that are normally done through credit cards and ATM cards. The move is in line with Emirates ID’s vision and strive to actively contribute to the government and economic transformation in the country, and boosting UAE’s global competitiveness towards realizing the UAE Vision 2021.

Advances in Social Sciences Research Journal (ASSRJ) is an international peer reviewed monthly on-line journal published by the Society for Science and Education, United Kingdom. The journal encourages the researchers and practitioners to publish their theoretical & empirical research articles, reviews and case studies related to all the field of social sciences.

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