Usman Khalid is a CEO of Centric and ViroMasks. Centric is a digital transformation agency and ViroMasks is primarily an eCommerce brands selling in over 30 countries currently. The below opportunity and thoughts are his personal opinions and is not legal advice.
Stripe, one of the world’s largest payment processor with over 1 Million accounts is opening in United Arab Emirates imminently. Stripe is a 100 Billion USD company with more of its key customers receiving payments from over a hundred countries. Stripe Atlas, is a division of Stripe; that helps you setup a company in USA along with Tax ID and Bank accounts for a fee of less than a thousand dollars. Stripe works; and is easy to integrate not only with your custom built eCommerce stores but also for SaaS model stores like Shopify and others.
United Arab Emirates, is a country right in the middle of the world map. It is a tax-free country (with some exceptions); is very well connected through its airlines Emirates and Etihad which in the post pandemic world are relying more on cargo than passengers. UAE, has a free market approach with no limitations on foreign currency transactions or business ownership (in Freezone). UAE, in addition offers visa on arrival to more than 50 countries, is home to over 200 nationalities and offers a very open culture.
Global eCommerce, is set to grow at accelerated pace. In 2020; the USA eCommerce grew by close to 40%. Globally, eCommerce sales now depict around 16% of total global retail sales. With more brands looking at eCommerce from a global angle than just their home markets; UAE can provide some key advantages.
How to capitalize on Stripe coming to UAE?
First and foremost; is to get on Stripe Atlas and the only way to get on it will be to provide cheaper business licenses. Currently, it costs upwards of five thousand USD to open a company in UAE. Getting on Stripe Atlas platform will be key to get a steady stream of new businesses opening up in UAE. We are hoping that a Freezone like DMCC or DAFZA will already be looking into it. Without Strip Atlas as the platform to open companies in UAE; we believe it will remain difficult to attract SMEs to open.
Secondly, UAE is hub of east and west trade. It made its place through Jebel Ali Free zone and port back in early 90s. This attracted quite a few companies and was instrumental in making Dubai a regional Hub for regional trade. Tourism followed shortly afterwards and now welcomes around 20 Million visitors per year (minus the COVID year).
Thirdly, UAE boasts the busiest International Airport in the world. Emirates and Etihad; the local airlines have hundreds of planes and we are quite sure in post pandemic world; they would be prioritising cargo operations. This would enable cost efficient movement of stock for eCommerce companies. In addition; the like of DHL, Fedex and UPS have their regional offices located in UAE.
Stripe is to payments what Amazon is to eCommerce. Stripe is big and accelerating the growth every year. It is in their benefit to offer better jurisdictions for their potential customers. UAE has unique advantages around Taxation; which is typically a nightmare for USA and European entities if the owners are foreigners. The tax bills as well as the consultants to file these properly costs upwards of tens of thousands of US dollars per year. Previously, these entities were necessary to get an account with Stripe. One of UAE Freezones need to capitalize on this opportunity and provide one click company opening at less than a thousand USD. Rest, the entrepreneurs will do.
The benefit of the above are many folds; starting from more jobs created in the logistics industry to money being parked in UAE banks. Easier re-export rules by deferring customs duty will also provide a boost. This will also enable the local SMEs to generate more business and will boost business tourism.