Xsquare Partners with Spare for Pay By Bank Integration

Xsquare has announced a strategic partnership with Spare to embed Pay By Bank capabilities into business workflows. The collaboration, revealed on July 13, 2026, aims to reduce transaction costs and settlement delays for businesses in the UAE. Current card payment processes incur costs of 2–3% per transaction, while delays disrupt cash flow and operational planning.

Impact on Transaction Costs

Businesses in the UAE currently face transaction costs of 2–3% on every card payment. These fees, combined with the inefficiencies of traditional payment systems, create friction in B2B transactions. Spare’s integration with Xsquare seeks to address this by enabling direct bank-to-bank transfers, eliminating intermediaries and reducing costs. The 2–3% fee structure is particularly burdensome for small and medium-sized enterprises (SMEs), which often operate on thin margins. By shifting to Pay By Bank, which typically incurs lower or zero interchange fees, businesses could redirect capital toward operational expansion or innovation. This aligns with broader trends in the MENA region, where fintechs are increasingly targeting cost optimization for SMEs, a sector representing over 90% of businesses in the UAE.

Addressing Settlement Delays

Settlement delays remain a critical challenge for businesses, often extending beyond 24 hours. This disrupts cash flow and complicates financial planning. The new Pay By Bank capabilities are designed to expedite settlements, providing businesses with real-time transaction confirmation and faster access to funds. Traditional card-based systems rely on multiple intermediaries, including card networks and acquiring banks, which can prolong settlement times. In contrast, direct bank-to-bank transfers, facilitated by Open Finance infrastructure, enable near-instant settlement. This is particularly valuable for industries reliant on rapid cash flow, such as e-commerce, logistics, and cross-border trade, where delayed payments can lead to operational bottlenecks.

Significance

For the MENA fintech ecosystem, this partnership underscores the accelerating adoption of Open Finance solutions in the region. By embedding Pay By Bank infrastructure into business workflows, Xsquare and Spare are positioning the UAE as a testing ground for next-generation B2B payment models. The integration aligns with broader regional trends toward digitization and financial inclusion, as outlined in the UAE’s Vision 2021 and the broader GCC strategy to foster innovation in financial services. The move also reflects the growing influence of Open Banking frameworks, which have been increasingly adopted in the region to enable seamless data sharing between financial institutions and third-party providers.

For regional financial institutions and fintech operators, the practical question is whether this model can scale across multiple jurisdictions while meeting regulatory requirements. The UAE has been proactive in establishing a regulatory sandbox for fintech experiments, which could facilitate the expansion of this model to other GCC countries. However, challenges such as varying regulatory frameworks, data privacy laws, and interoperability standards across banks may hinder widespread adoption. Until specific approvals, partner banks, and transaction volumes are disclosed, the development remains an infrastructure initiative to monitor.

What Wasn’t Disclosed

The announcement did not specify investment size, ownership terms, regulatory approvals, named banking partners, launch markets, or committed transaction volumes. It also did not confirm when the first live corridor or product would move into production. The absence of these details raises questions about the partnership’s immediate scalability and the extent of regulatory alignment. For instance, without clarity on which banks are involved, it is difficult to assess the potential reach of the Pay By Bank solution. Similarly, the lack of transaction volume commitments leaves uncertainty about the model’s viability in high-volume B2B environments. These gaps suggest that the partnership is still in its early stages, with further announcements likely as the integration progresses.

Contextualizing the Partnership

The collaboration between Xsquare and Spare reflects a broader shift in the MENA fintech landscape toward embedded finance solutions. Embedded finance, which integrates financial services directly into business workflows, has gained traction as companies seek to streamline operations and reduce reliance on traditional banks. In the UAE, where digital banking adoption has surged, this partnership could catalyze further innovation in B2B payments. Spare’s Open Finance infrastructure, which allows businesses to access financial services through APIs, complements Xsquare’s focus on B2B payment efficiency. Together, they are addressing a critical pain point for businesses: the need for faster, cheaper, and more transparent payment mechanisms.

The partnership also aligns with the UAE’s efforts to position itself as a global fintech hub. Initiatives such as the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) have been instrumental in attracting international fintechs and fostering regulatory innovation. By partnering with Spare, Xsquare is leveraging global Open Finance expertise to enhance local solutions, potentially setting a precedent for other regional fintechs. However, the success of this model will depend on the ability of both companies to navigate the complex regulatory and operational landscape of the MENA region.