Digital payments dethrone cash as number 1 payment method in Saudi Arabia

The study, released by the Saudi Central Bank (SAMA) covered government, business and consumers across the length and breadth of the country to assess the share of cashless payment transactions out of the total number of transactions.

It reached out to over 1,500 consumers and 218 businesses, and the findings have revealed that for the first time, cash has ceased to be the most common method of payment across all economic sectors.

Percentage of electronic payments shot up significantly to reach 57 percent in 2021. This was at 36 percent in 2019 and shows the effect of COVID-19, when many people made a switch to cashless payment.

In its report, SAMA said: “Covid-19 is believed to have had a substantial impact on accelerating the growth in non-cash payments, especially in the consumer retail space. Measured in March 2020 (at the point of Covid-19 lockdown) and again in March 2021, the Point of Sale transaction volume grew by 127 percent. For the full year 2021, PoS transaction volume grew by 83 percent – substituting for cash and prompting the premiere positioning of card payments.”

In 2021, over 5.5 billion card payments were executed in the country. This represents 243 percent growth on 2019 card payment volumes. This increase has been fueled by the convenience of the ‘mada atheer’ contactless card payment capability. Over 95 percent of all PoS payments in 2021 are now contactless, compared to 69 percent two years ago.

Approximately 11.3 billion payments, excluding ATM withdrawals, were executed in the country in 2021. The number itself represents a substantial increase compared to 2019, while almost seven billion (62 percent) of these were undertaken using non-cash payment means. The value of payment transactions is estimated at SR15.6 trillion.

On average it is estimated that Saudi residents made over 277 payment transactions each during 2021 (compared to an estimated 140 transactions each during 2019). Globally, this compares to around 550 transactions per annum per adult in the UK and over 760 transactions per adult per year in the US.

In the business sector, e-payments share was up to 84 percent in 2021, compared to 51 percent in 2019 – a growth of 65 percent within two years. The government has embraced e-payment whole-heartedly, doing 99 percent of their total payments in cashless manner.

The SAMA study is part of the Financial Sector Development Program (FSDP), one of the objectives of which is to promote the use of digital payment solutions to transform into a cashless society. FSDP aims for cashless transactions in Saudi Arabia to reach 70 percent of all transactions by 2025.