Saudi Small Businesses Rethink Payments for a Faster Future

Saudi Arabia is emerging as a focal point in cross-border payments thanks to the rise of digital wallets.

The PYMNTS Intelligence report “Global Money Movement: Saudi Arabia Edition,” a collaboration with TerraPay, revealed that 54% of Saudi consumers who made cross-border payments in the past year used digital wallets.

The figure placed the country behind only the United States (63%) and ahead of more mature financial markets like the United Kingdom and Singapore. The report also highlighted a generational divide, as 63% of Generation Z consumers in Saudi Arabia used digital wallets for cross-border payments compared to 28% of baby boomers and seniors.

This youth-driven adoption aligned with broader trends in digital transformation across the country. Under Vision 2030, Saudi Arabia has prioritized digital innovation and financial inclusion. Government-backed initiatives, such as the rollout of faster payment systems and the promotion of FinTech startups, have fueled consumer readiness and enthusiasm for new payment technologies.

Despite this consumer enthusiasm, the adoption rates of digital wallets across Saudi Arabia’s small- to medium-sized businesses (SMBs) painted a different picture.

Cracking the Code for the Contrasting SMB Landscape in Saudi Arabia

While 84% of Saudi Arabian business leaders said they were aware of digital wallets, usage lagged behind that of consumers. The report found that 39.7% of SMBs used digital wallets for cross-border payments, and this number dropped as company size increased. Among firms earning up to $500,000 annually, half reported using digital wallets. But usage fell to 38.5% for businesses with revenues up to $2.5 million and 36% for those bringing in up to $10 million.

This inverse relationship between company size and digital wallet adoption stood in stark contrast to trends observed in other markets like Singapore and the U.S., where larger firms were often the early adopters of new technologies due to their greater resources and risk appetite.

The reasons behind the SMB reluctance were multifaceted, according to the report. Security was a paramount concern, cited by 55% of non-user SMBs. The same percentage flagged the issue of transaction tracking. High costs rounded out the top deterrents. Additionally, 40% of businesses complained about poor exchange rates offered by digital wallet providers, a higher percentage than in any of the other countries surveyed.

Bridging Perception vs. Reality

While Saudi SMBs were more aware of digital wallets than consumers (84% versus 73%), their use remained lower. The discrepancy suggested that familiarity alone did not equate to trust or utility, especially when operational needs and risk management came into play.

For SMBs, detailed demonstrations of security protocols, compliance features and integration capabilities could alleviate fears and facilitate uptake.

In contrast, consumers were not only more open to using digital wallets, but they also reported fewer obstacles. Their main barriers were lack of awareness (26.4%) and transaction limitations (25.7%). Security, which was the top concern for businesses, was a comparatively lesser issue for consumers at 21.6%.

These insights hinted at a broader psychological and operational divide. Consumers prioritized speed and convenience; businesses prioritized stability and traceability. The result was a digital adoption chasm that must be bridged if Saudi Arabia wants to realize its full FinTech potential.

Saudi Arabia stands at a crossroads in its financial evolution. Bridging the digital wallet divide is not just about enabling faster payments; it’s about redefining how money moves in a globalized economy. If the right steps are taken now, Saudi Arabia could become a blueprint for digital transformation across the Middle East and beyond.