Saudi Arabia Eyes Significant Leap Towards Cashless Transactions By 2024
The Kingdom of Saudi Arabia is on the brink of a significant shift towards cashless transactions, with an anticipated 7.6 percent increase in 2024, reaching SR550 billion ($146.8 billion) from SR511.5 billion the year prior. This forecast comes from a report by GlobalData, a renowned data analytics and consulting firm based in London, which also predicts a steady annual growth rate of 6.4 percent in the Saudi card payments market from 2024 to 2028, ultimately hitting SR705.2 billion.
The move towards a cashless society in Saudi Arabia is part of a broader government initiative, aimed at encouraging consumers to opt for cards over cash for their financial dealings. Ravi Sharma, a lead banking and payments analyst at GlobalData, explains that while cash has been the traditional payment method in the country, there's a noticeable shift towards electronic payments. He attributes this trend to the country's robust digital payment infrastructure, which includes a developing card market and an established card acceptance infrastructure.
Sharma highlights the government's proactive measures to further this transition, notably by urging merchants to introduce at least one electronic payment method besides cash. Although cash still plays a significant role in the consumer payments landscape, especially for smaller transactions, its usage is experiencing a decline.
Digital Payments: The Future Of Saudi Transactions
The push for digital payments aligns with Saudi Arabia's Vision 2030, which sets an ambitious goal to reduce cash transactions significantly, aiming for electronic payments to constitute 70 percent of all transactions by 2025. The COVID-19 pandemic has notably accelerated this shift, with Sharma pointing out a growing consumer preference for contactless payments. He cites statistics from the Saudi Arabian central bank, which reported a rise in transactions using NFC-enabled mada cards, from 331.7 million in February 2023 to 363.4 million in February 2024.
Debit cards are currently the most popular choice, making up 85 percent of the total card payment value in 2023. This preference is attributed to the government's financial inclusion initiatives, the consumers' inclination towards debt-free payments, and cautious spending habits.
Sharma emphasises the collective efforts contributing to the shift away from cash, including the government's push, advancements in payment infrastructure, growing consumer awareness, and the adoption of new technologies like contactless payments. Moreover, recent data from the Saudi Central Bank showcases a notable 20 percent year-on-year increase in payments through point-of-sale terminals in February, amounting to SR53.72 billion. The bulk of this spending was on food and beverages, accounting for 15.7 percent, followed closely by expenditures on restaurants and cafes.
This transition reflects Saudi Arabia's commitment to modernizing its financial system and aligning with global trends towards digitalization. As the country continues to invest in enhancing its payment infrastructure and promoting consumer adoption of electronic payments, the move towards a cashless society appears to be well on its way.
Sign in with Google