Digital merchants are continuously operating in this space, as traditional banks often lag in terms of technological applications. In 2021, the Dubai-based neobank YAP partnered with RAK Bank, a retail banking company, to begin increasing the space of digital remittances, spending and budgeting analytics, and broadening the scope of Person-to-Person payments.

All of these developments take time, and require substantial investment, both from public and private institutions. However, in this case, we’re seeing how a handful of Middle Eastern nations are directly investing in appropriate technology to provide traditional banks and digital native merchants with more progressive regulations, further establishing their presence as the driving force behind digital payments.

Despite recent positive developments, escalating tensions between nations in the region could bring new challenges to the digital payments ecosystem. Something that has been a unifying factor for many consumers has been the wide-scale accessibility of electronic payment tools on the heels of the pandemic.

Yet, conditions have changed since the early onset of the pandemic, and after the fintech industry witnessed a steep decline in capital investment last year, the current political climate could drive development to a near standstill and perhaps wipe out all the progress that has been made throughout the last several years.

As political tension drives an even deeper wedge into the economic recovery from the pandemic, more consumers in the region are using digital financial services as an affordable and more accessible means to complete transactions.

However, conflict among key nations could create longer-lasting challenges for newcomers in the market. Weaker funding opportunities and slower consumer adoption could drive digital innovation aground while being overshadowed by economic and political uncertainty.

While conditions are anything but normal, perhaps there is a slight chance that the Middle East could become a fast disruptor in the digital payments market and a driving force of development for the fintech industry.