Saudi Arabia sees cashless payments up 25% in January

Unsplash/Clay Banks

• Cashless transactions surpassed ATM cash withdrawals 
• Digital payment firms including Network International enter market
• Saudi Arabia has 98% internet penetration

Saudi Arabia saw the number of digital point-of-sale (Pos) transactions increase by nearly a quarter year-on-year during January, as the kingdom’s drive towards becoming a cashless economy takes hold.

Figures from the Saudi Central Bank showed there were 598,861 transactions last month for both ATM cash withdrawals and credit card transactions at retail outlets and other platforms, an increase of 24.7 percent compared to the first month of 2022.

The transactions amounted to SAR 41.666 million ($11.11 billion) over the same period, an increase of 6.9 percent year-on-year.

Saudi Arabia’s cashless Pos transactions surpassed ATM cash withdrawals for the first time in the second quarter of 2022, which the Saudi Ministry of Investment described as a “significant milestone”.

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As part of Saudi’s Vision 2030 programme the country aims to see digital payments make up 70 percent of the total by 2025, up from 18 percent in 2020.

The kingdom is home to a young, wealthy and digitally savvy population. World Bank data shows it has 98 percent internet penetration, with smartphone use among 18 to 75-year-olds at 97 percent.

According to Mastercard’s 2022 New Payments Index, consumers in Saudi Arabia are increasingly using digital cards, biometric payments, buy now pay later (BNPL) and open banking.

The survey found that 89 percent of people in the kingdom have used at least one emerging payment method in the last year.

While traditional payment methods still have traction, 30 percent of consumers indicated they used less cash in the past 12 months.

Maria Medvedeva, VP and country business development lead for Saudi Arabia and Bahrain at Mastercard, said the benefits of a simpler, more convenient and secure payment ecosystem are being being discovered and “driven by Saudi’s young tech-savvy generation, and is great news for the kingdom’s future prospects”.

Saudi Arabia’s cashless ambitions have prompted digital payment players such as Network International and Paymob to focus on growth in the kingdom.

Dubai-headquartered Network International said last month it expects its total 2022 revenues to grow by more than a quarter following the expansion of operations in Saudi Arabia, Egypt and Africa.

Preliminary audit results will be released in March but the company believes earnings for last year will reach $438 million.

The company launched two new processing customers in Saudi Arabia, bringing its portfolio to six in total.  

Network has set a medium to long-term $50 million revenue target in the kingdom, with CEO Nandan Mer reporting that the company has a “healthy” customer pipeline in the kingdom.

Paymob, the Cairo-based payments facilitator, also announced this week it was expanding into Saudi Arabia after its recent debut in the UAE market.

The Egyptian company said its expansion in the Gulf has been supported by $50 million Series B funding secured last year, which is also being used to expand Paymob’s product range. 

The kingdom is poised to launch three digital banks over the next 12 months, plus new regulations, as part of its aim to become a major player in the fintech industry.

Last month, Nezar Alhaidar, director of Fintech Saudi, an initiative set up by the kingdom’s central bank, said the sector is “on the cusp of being propelled onto the global stage”.

In the same way that the UK and Singapore have positioned themselves in Europe and Asia respectively, Saudi Arabia is seeking to become the gateway for fintech activity in the Middle East.