Remarkable Success of Mobile and Contactless Payments Through Near Field Communication “NFC” Technology Boosting the Aim of a Less Dependent on Cash Society Within the Kingdom of Saudi Arabia
As Saudi Arabia’s national payments infrastructure operator, Saudi Payments has the task of driving the Kingdom’s digital transformation towards a less dependent on cash society. Its aim, under the Kingdom’s Vision 2030 roadmap, is to ensure 70% of all transactions in the country are digital by 2030, and its secret weapon towards achieving this, is through digital and mobile payments (utilizing Near Field Communication “NFC” technology within physical cards and mobile devices).
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Introduced only four years ago, mobile and NFC payments have rapidly become the payment of choice for a largely young, youth and tech savvy Saudi and non-Saudi citizens within the society. The rate of growth has been phenomenal, increasing from 97 million transactions in September 2019, to over 266 million contactless transactions with a value of SAR 27.5 billion. That represents 174% increase comparing to same period in 2019.
The Saudi population is young, in a nation of 35 million people, two thirds are under the age of 35. The Kingdom is also one of the highest users of mobile phones in the world, with over 28 million registered smartphones. The Millennials and Gen Z have grown up in a digital age where they expect to have technology to their fingertips to make payments. “Cash is fast” terminology is becoming a phase of the past.
There are currently over 22 million NFC mada cards in circulation in the Kingdom. In the third quarter of 2020, mobile payments represented 24% of all POS payments, an increase of 567% compared with 2019.
Saudi Payments Managing Director Fahad Al-Akeel said: “The growth in digital and mobile payments has outstripped expectation, Saudi Payments strategy is to enrich the Kingdom’s digital and mobile payment environment and make it more competitive. Our aim is to support the National Digital Transformation under Vision 2030 by enabling the Kingdom of Saudi Arabia to become essentially a less dependent on cash society during the next ten years, if not even achieved beforehand.
However, the speed with which the technology has been adopted has surpassed all expectation. In September 2020 91% of transactions were contactless, compared with 66% in 2019. There are also now over 614K POS terminals across the country, 96% of which are NFC enabled.”
Fahad Al-Akeel acknowledges and emphasizes that COVID-19 has had a positive impact on speeding up the transition, “The huge growth this year in digital and mobile payments could be attributed to COVID-19 and cardholders increasingly turning to online shopping and preferring to use cards and mobile at point of sales “POS” instead of cash. The result has meant we have exceeded all forecasts, with 25% mobile Payments Volume share vs overall POS Volume as of September 2020, compared to 8% in September 2019, an overall increase of 495%.
Saudi Payments developed its universal mobile payments infrastructure in 2018, in connection with all card issuers in the Kingdom, which rapidly lead to the introduction of NFC based payment solutions such as mada Pay and Apple Pay. The overwhelming success of the infrastructure means further OEM and international Pays are anticipated to come on line in the near future.
More recent developments have included an NFC limit/CDCVM/CVM/ PIN free which is applicable on physical NFC mada cards. The single transaction limit on physical cards and mada pay was increased in March 2020 from SAR 100 to SAR 300, in order to minimize the chance of COVID-19 infection and increase the share of contactless payments by simply tapping the card or mobile device without the need of a PIN entry at the POS terminal.
These multiple steps have collectively made NFC a cultural phenomenon which could easily see the Kingdom achieve its Vision 2030 goal of creating a cashless society well before 2030.
Saudi Payments is a fully owned subsidiary of the Saudi Arabian Monetary Authority (SAMA)
About Saudi Payments
Saudi Payments was established in 1991 to operate and develop all major national payment systems.
Since its establishment, it has played a vital role in enabling the public and private sectors to connect with domestic and international payment services, helping to develop the Kingdom’s payment infrastructure.
Saudi Payments provides fast, flexible, and safe electronic payment services at low cost, through mada, SADAD and Esal systems, enhancing the national electronic payment infrastructure and reducing cash transactions.
Saudi Payments supports the government’s Financial Sector Development Program, a part of the Kingdom's Vision 2030 Program. Saudi Payments operates to international standards, connecting local and international service providers with payment networks, reducing the need for cash payments.
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