The Saudi Arabia card payments market is expected to grow by 14.6% in 2023 to reach SAR532.1bn ($141.9bn). Growth will be driven by increasing preference for electronic payments, a surge in contactless payments, and the government’s push for a cashless society, says GlobalData, publishers of EPI.
GlobalData’s Payment Cards Analytics reveals that the card payment value in Saudi Arabia registered a growth of 29.8% in 2021 and 17.3% in 2022, driven by improving economic conditions and a rise in consumer spending.
Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, said: “While cash has traditionally been the preferred method of payment in Saudi Arabia, its usage is on decline in line with the rising consumer preference for electronic payments.
“This trend became more prevalent during Covid-19 pandemic, with banks and merchants urging consumers to use non-cash payment methods to help contain the spread of the virus. The increasing preference for contactless payments and mandatory acceptance of electronic payments at retail stores are among the key drivers of the payment card market growth.”
The government also aims to reduce the country’s dependence on cash, promote electronic payments, and encourage payment innovation. The Kingdom’s Vision 2030 plan is aimed at reducing cash transactions and increasing the share of electronic payments to 70% of all transactions by 2025. This will greatly benefit the debit and credit card adoption and usage.
95% of all PoS transactions are contactless
The pandemic changed the way Saudi consumers make payments, with an increasing number of consumers preferring contactless payments supported by an improved payment infrastructure. According to the country’s national payment infrastructure operator, Saudi Payments, 95% of all point of sale (POS) transactions in the country were contactless in 2021.
In terms of card preference, debit cards dominate the overall card payment space accounting for 89% of the overall card payment value in 2022. The government’s financial inclusion initiatives, consumers’ preference for debt-free payments, and prudent consumer spending have resulted in their dominance. Credit and charge cards, on the other hand, are not very popular in Saudi Arabia primarily due to a religious aversion towards debt.
Sharma added: “Saudi consumers are gradually embracing electronic payments, moving away from cash, supported by the government push, improvement in payment infrastructure, growing consumer awareness and rising adoption of latest technologies like contactless. The Saudi Arabia card payments market is expected to grow at a strong compound annual growth rate (CAGR) of 10.2% between 2023 and 2027 to reach SAR785.8bn ($209.5bn) in 2027.”