Technology Helps Saudis Overcome Cash Dominance

Saudi Arabia is making headway towards a cashless community, as new technology guides the Kingdom towards more modernized payments.

Saudi Arabians have relied on cash payments for far too long, but the National Commercial Bank, as reported in the Saudi Gazette, revealed the banking landscape is finally improving.

A representative from the bank stated, “In the last couple years, technology has ostensibly changed the banking landscape. By changing the way banks do business and undertake their operational activities, technology had increased the speed of business and consumer transactions, which was an element in improving the absorptive capacity of the Saudi economy.”

At present, the country’s payment system operates through the Saudi Riyal Interbank Express System, SADAD, which is the bill payment system, as well as the bank’s clearing system, ATMs and POS terminals. Of all these payment channels, the SRIE system accounts for the largest number of transactions. By the end of 2012, SR65.4 trillion in transactions were completed through the channel. 

The reasonably new SADAD Payment System was brought forth to provide and streamline bill payment transactions for end consumers via all payment channels in the country’s banks. When SADAD was introduced in 2004, there was an increase in growth, and the Kingdom’s payment value went up by 14 times, going from SR8.9 billion in 2007, to about SR132 billion by 2012, reported the Saudi Gazette. The Saudi government is adamant that SADAD was largely credited for reducing front-office hardships at banking branches. The banks were often burdened with manual labor duties that came with paper-based payments, and since 70 percent of bills were paid in cash before SADAD, this was a huge challenge for banks.

ATM withdrawals still continue to rise tremendously, with a growth of SR171.6 billion in 2003 to SR625.8 billon in 2012. These figures indicate that consumers have grown to detach themselves from relying on branch staff to help them with transactions, and have become comfortable with newer technology.

Additionally, POS transactions increased by 24.2 percent in 2013 from the year before, which represents the 14^th year of double-digit growth since 2009.

These figures and technology-related growth spurts all point to the fact that technology has started to ease its way into consumers and banks. Saudi Arabia is a country that has been long wedded to its cash, and the task of overcoming a cash culture is no easy feat.

To read the full story at Saudi Gazette click here.