Arab News, Wed, May 01, 2024 | Shawwal 22, 1445
Cashless payments in Saudi Arabia to rise by 7.6% in 2024
Saudi Arabia:
Cashless payments in Saudi Arabia are expected to surge by 7.6 percent in 2024
to SR550 billion ($146.8 billion) as compared to SR511.5 billion the previous
year, a report said.
The report issued by GlobalData, a London-based
data analytics and consulting company, projected the Saudi card payments market
to grow at an annual rate of 6.4 percent between 2024 and 2028 to reach SR705.2
billion.
The uptick comes amid the Saudi government’s push
for a cashless society by encouraging consumers to switch to cards for financial
transactions.
“While cash has traditionally been a preferred
method of payment in Saudi Arabia, its usage is on the decline in line with the
rising consumer preference for electronic payments,” said Ravi Sharma, a lead
banking and payments analyst at GlobalData.
He added: “The country has a robust digital
payment infrastructure, supported by a developing card market and a
well-established card acceptance infrastructure.”
Sharma further noted that Saudi Arabia’s
government is taking effective steps to enhance the infrastructure in the
country by encouraging merchants to adopt at least one electronic payment option
apart from cash.
The report, however, added that cash remains an
integral part of the Saudi consumer payments landscape, particularly for
lower-value transactions, but the usage of hard currency is showing signs of
decline.
Promoting digital payments is crucial for Saudi
Arabia, as the Kingdom’s Vision 2030 aims to reduce cash transactions and
increase the share of electronic payments to 70 percent of all transactions by
2025.
“The (COVID-19) pandemic changed the way Saudi
consumers make payments, with an increasing number of consumers preferring
contactless payments,” said Sharma.
He added: “Contactless cards have been on the rise
in the country with the Saudi Arabian central bank reporting 363.4 million
transactions using NFC-enabled mada cards in February 2024 compared to 331.7
million in February 2023.”
In terms of card preference, debit cards dominate
the overall card payment space, accounting for 85 percent of the overall card
payment value in 2023.
GlobalData pointed out that the government’s
financial inclusion initiatives, consumers’ preference for debt-free payments,
and prudent consumer spending have resulted in the domination of debit cards in
the Kingdom.
“Saudi consumers are gradually embracing
electronic payments, moving away from cash, supported by government push,
improvements in payment infrastructure, growing consumer awareness, and rising
adoption of newer technology like contactless,” added Sharma.
In April, data released by the Saudi Central Bank
revealed that payments made through point-of-sale terminals in the Kingdom
experienced a significant 20 percent annual increase in February, totaling
SR53.72 billion.
The largest portion of POS spending in February
was allocated to beverages and food, comprising 15.7 percent or SR8.43 billion.
This was followed by spending on restaurants and
cafes, accounting for 15 percent of the total, reaching SR8.02 billion.