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Saudi Central Bank Exceeds FSDP Expectations as the Region Works Towards a Cashless Economy

Targets set by the Financial Sector Development Program (FSDP) in relation to the share electronic payments in retail have been surpassed by The Saudi Central Bank (SAMA) as it announced that the shares of total transactions had exceeded 57 per cent of total transactions conducted in 2021, two per cent more than the target.

The FSDP is one of the main programs of Saudi Vision 2030, a strategic framework established in 2016 to reduce Saudi Arabia’s dependence on oil, diversify its economy, and develop public service sectors.

On this occasion, His Excellency Fahad Almubarak, governor of the Saudi Central Bank, stated that SAMA, in line with the guidelines of the Kingdom’s wise leadership, is working on promoting electronic infrastructure, expanding electronic payment activities and accelerating the electronic transformation of transactions, remarking that this most recent achievement was driven by the Financial Sector Development Program and the implementation of the Bank’s strategic plans for the payments sector, primarily aiming to reduce dependency on cash, and increase the rate of electronic payments to 70 per cent by 2025. Almubarak also noted that joint efforts between the government and private sectors to increase payment choices and implement many payment digitisation initiatives together with private sector innovation and expansion initiatives as well as opening financial services to a new class of fintech stakeholders in the Kingdom, all played an instrumental role in making this achievement possible.

SAMA also noted that there were several jumps in the number and value of payments made through the National “mada” payment system during these past few years, as the number of transactions made through this system has exceeded 5.1 billion transactions during 2021 for a growth rate of 81 per cent compared to growth of 76 per cent recorded in 2020. SAMA also observed a sizable increase in the number of PoS terminal numbers and commercial sector coverage reaching more than a million PoS terminals were deployed by the end of 2021 compared to 721,000 terminals deployed by the end of 2020. Contactless Payments (NFC) methods also witnessed a tremendous increase in utilisation as they accounted for 95 per cent of all PoS transactions in 2021, alongside other electronic payment methods such as, eCommerce payments, “SADAD” system payments and the new Instant Money Transfer through “Sarie” system, and others.

Additionally, corporate payments in the business sector have marked a significant increase in electronic payments, with 84 per cent of the sector’s total payment transactions being electronic in 2021, compared to just 51 per cent in 2019, marking a 65 per cent increase in electronic payment share during these past two years. Results have also shown that major corporations rely on electronic payments to complete 99.6 per cent of their transactions, while the same metric stood at 78 per cent for SMEs transactions and 76 per cent for those of micro-enterprises.

SAMA stated that this achievement comes in support of the guidelines of the Kingdom’s leadership, which aim to promote the electronic transformation of the Saudi economy, positively redirecting consumers to adopt electronic payments to conduct their transactions, recognising its benefits in the facilitation of more convenient transactions, the reduction of the financial burden imposed on the national economy by cash payments, in addition to the reduction of operational costs imposed on most retail stores and shops, better record keeping and the increase of transparency in financial transactions.

Author

  • Francis is a journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

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