How Saudi Arabia plans to accomplish cashless payments target of 70% by 2030

A cashless society is one where financial transactions are executed digitally, without physical banknotes changing hands.

Sweden is its prime example. In Sweden, 900 out of Sweden’s 1600 bank branches don’t accept cash deposits. Sweden is leading the world, with more than 59 percent of consumer transactions completed using non-cash methods and Canada is a close second with 57 percent of transactions made using alternative methods. In 2023, Sweden will becoming the first cashless nation in the world, with an economy that goes 100 percent digital.

A key part of Saudi Arabia’s Vision 2030 is to achieve an increase in the amount of e-payments transacted in the country. The aim is to shift the Saudi society from an important reliance on cash to using digital and electronic payment methods.

The Financial Sector Development Program (FSDP) is one of 12 executive programs launched by the Council of Economic and Development Affairs to achieve the objectives of the Vision 2030 reform plan. One of FSDP’s main targets is to extend non-cash utilization from 18% in 2016 to 28% in 2020 to 70% by 2030.

Saudi Arabia is attracting other eCommerce giants to extend Online or Cashless Transactions. Apple Pay was launched within the Kingdom, joining the cashless roster of payment methods available to Saudi consumers

VISA’s General Manager for Saudi Arabia, Ali Bayloun, stated of the development:

                         “As a country filled with tech-savvy, mobile-first consumers, we are delighted to work with Saudi Payments and our bank partners to help bring Apple Pay to Visa cardholders here, making their payments experience easier, faster and more secure than ever before.”

BayanPay, a digital payments company owned by London-listed Finablr, has gotten administrative endorsement to work its portable cash stage in Saudi Arabia, as the Kingdom looks to a future without money.

Saudi Arabia’s e-commerce market is expected to be worth $22 billion by 2022. Saudi Arabia was the second most-advanced e-commerce market in the region, with a penetration rate of 3.8%, behind the United Arab Emirates at 4.2%.

Saudi Arabia taken large steps to bring its citizens to access many of the latest cashless technologies through their mada Debit Card schemes.

mada is the latest generation of the Saudi Arabian electronic payments network and it’s responsible for connecting all the ATMs and credit card terminals across the country. mada additionally interfaces customers to worldwide installment frameworks like GCC Net, VISA, MasterCard, and American Express to give more extensive acknowledgment over the area and abroad.

Saudi Payments command is to build up a public installment framework and give the necessary interoperability to guarantee all players have a level battleground as the nation pushes toward a cashless society.

For a cashless economy to truly take hold, the Saudi Arabia needs these three key elements.

First is a young, wealthy, and digitally-literate population. The young generation of Saudi, which comprises 70% of its 33.7 million population, is one of the most digitally-savvy in the world. However, the Kingdom still lags behind countries in terms of credit card penetration and digital payment method, with around 62% of e-commerce shoppers still prefer cash-on-delivery.

The second element is a digitally-enabled payment infrastructure. The Central Bank (SAMA) and Saudi Payments Company are the main actors behind mobilizing initiatives. The government has also set a target to nearly double the POS coverage to 648,000 terminals by 2023, supported by the implementation of 5G by major telecommunication companies in the Kingdom.

The last element is entrepreneurial fintech ecosystems, aimed to drive job creation in sustainable new digitally-focused industries and stimulate economic growth. Fintech Saudi was launched back in April 2018 to support the development of the fintech industry and address key concerns in developing fintech startups in the Kingdom, including lack of infrastructure, talent, and supporting regulations. Commercial banks are also building partnerships with fintech startups to drive fintech innovations and digital transformations further.

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