Digital payments in Saudi Arabia surged by 75% last year, as consumers increasingly began shopping online following the COVID-19 outbreak. Meanwhile, cash withdrawals from ATMs and other payment points declined 30% during the same time period.
Point of sale (PoS) refers to a location where users can complete payments for products and services. This may be via a debit or credit card in a clothing store, a virtual payment made in a coffee shop or through an online food delivery app.
In statements shared with Arab News, Talat Zaki Hafiz, Economist and Secretary-General of the Media and Banking Awareness Ccommittee for Saudi Arabia-based banking service providers, noted:
“The total number of the PoS operations in 2020 amounted to about 2.8 billion, an increase of 75% compared with the same period in the previous year.”
The total value of operations stood at SAR 349 billion (appr. $93.7 billion), an increase of almost 24.1% when compared with the same time period in 2019, Hafiz confirmed.
The number of PoS devices operating in Saudi Arabia had increased significantly by the end of last year to over 700,000, which is around 70% more than the number of these terminals since the beginning of 2020.
As Saudi consumers began to shop more frequently via online platforms and conducted more digital or contactless payments during COVID, the number of cash withdrawals made in 2020 fell by over 318 million, or around 30% year-on-year (YoY).
“These statistics and indices confirm the increasing and steady demand by people and businesses to use e-payment technologies through PoS devices. The measures taken by the government in various sectors, including health and banking, to encourage e-payments have had positive effects and helped to reduce the negative impact of the Coronavirus on the country and its people, including businesses.”
Hafiz further noted that the increased use of online shopping and digital payments solutions should continue in a post-COVID world. Over 60% of Saudi residents are under the age of 30 and tech-savvy, which indicates that the country might be ready to increasingly adopt digital banking and other Fintech services, Hafiz claims.
Hafiz also mentioned that the primary goal of the Financial Sector Development Program (FSDP) — which is one of 13 executive initiatives introduced by the Council of Economic and Development Affairs to fulfill the stated objectives of Saudi Vision 2030 — is to lower the amount or frequency of cash payments in the country. This will be achieved by establishing the national finance infrastructure in order to support the increased use of digital payments.
Transitioning to a cashless economy could help with lowering costs related to printing paper currency notes, and it could offer more transparency into how the nation’s government is monitoring cash flows for tax collection purposes and may help combat commercial concealment, Hafiz noted.
Alistair Burton, Country Manager MEA at Criteo, stated:
“The events of 2020 made it an extraordinary year for e-commerce. Our research shows that this year consumers will swap door-buster deals for online discounts that start sooner and last longer.”