Saudi Arabia sees an increase in preference for electronic cash payments

Saudi Arabia has reported a significant increase in card payments in the first half of 2023. The interest in electronic cash payments is on the rise. As the preference for this method of making payments continues to increase, the country expects to see a boost of 14.6% by the end of the year. This comes as part of the Kingdom’s push for a cashless society, according to GlobalData.

Preference for electronic payments in Saudi Arabia on the rise

In its recent report, the data analytics company said that the Saudi Arabia card payments market would grow by 14% this year to reach SAR 532.1 billion, or $141.9 billion. The growth is, and will be, driven simply by the preference for electronic payments and a surge in contactless payments.

Of course, the government’s push for a cashless society has also played a big role in the rise of the card payments trend. GlobalData’s report indicates that card payment value in the nation went up by 30% in 2021 and 17% in 2022. At the time, it was driven by improving economic conditions and increased consumer spending.

For a long time, cash has been the preferred method of payment in Saudi Arabia, but lately, its use has been dropping quite noticeably. The biggest drop was recorded during the pandemic when both banks and merchants insisted that users switch to contactless payments to avoid spreading the virus via cash.

In addition, the Kingdom intends to reduce the reliance on cash payments, which is a part of its Vision 2030 plan. Meanwhile, the local national payments infrastructure provider, Saudi Payments, said that 95% of all POS transactions were electronic in 2021.

The increase in card payments usage to continue in years to come

GlobalData’s Lead Banking and Payments Analyst, Ravi Sharma, stated that the trend is likely to continue. According to Sharma, the card payments market will grow at a strong compound annual growth rate (CAGR) of 10% between the years 2023 and 2027. The trend is expected to reach SAR 785 billion ($209 billion) in 2027.

As for the type of cards that Saudi Arabia’s citizens prefer — debit cards seem to be the most popular type. The local population simply seems to prefer debt-free payments, meaning that they prefer to spend the money that they already have rather than the money that they have yet to earn. Debit card payments are responsible for approximately 90% of all card payments that the country saw last year.

Apart from card payments, Saudi Arabia is also among the nations that are exploring the potential of CBDCs. Supposedly, the Kingdom is focusing on local CBDC use cases and potential collaboration with fintech firms and banks. Four years ago, in 2019, the country collaborated with the Central Bank of the UAE on Project Aber. This was an exercise that aimed to assess the benefits of using decentralized payments technology. Specifically, the project’s goal is to adopt DLT in settlements of bonds and similar assets.