How Saudi Arabia became a global leader in contactless adoption
The Kingdom of Saudi Arabia (KSA) witnessed the fastest and highest growth in adoption of contactless payments through Near-Field Communication (NFC) in 2020 in the Middle East and North Africa with 94% of overall face-to-face payments. According to a whitepaper published by Saudi Payments, a fully-owned subsidiary of the Saudi Central Bank (SAMA), through the national payment scheme “mada”, in partnership with Visa, Saudi Arabia’s NFC penetration was above the European average (80%), and higher than Canada (76%) and Hong Kong (79%). In the MENA region, the Kingdom was first in NFC payments adoption, followed by Kuwait (81%) and United Arab Emirates (81%).1
“Saudi Arabia’s successful adoption of contactless payments through the NFC technology is helping move the Kingdom closer to Saudi Vision 2030 and the strategy of the Saudi Central Bank which aims to transition to a society less dependent on cash. Other key initiatives by Saudi Payments in partnership with other relevant government authorities that paved the way for the rapid adoption of contactless payments in Saudi Arabia included making electronic payments acceptance mandatory for all commercial activities through POS devices, increasing the number of electronic payment terminals especially for micro-SMEs, rolling out digital mobile wallets and enabling payment through smart devices via mada pay and Apple pay, and increasing the NFC transaction limit during COVID-19 from SAR100 to SAR300”, explains Abdulaziz Al-Afaleg, Saudi Payments Managing Director.
Even before the pandemic, in January 2020, the Kingdom of Saudi Arabia enjoyed strong NFC acceptance at 76% but the ongoing global public health crisis further accelerated the shift by 18% over the past 10 months, as consumers turned to faster, simpler and safer low- or no-touch ways to pay. Today, consumers in Saudi Arabia are increasingly using digital payment options for most of their purchases in grocery stores and supermarkets (92%), at fuel stations (93%), restaurants (94%), pharmacies (93%), quick service restaurants (94%), as well as for home improvement and supply (91%), retail goods (92%), and apparel and accessories (91%).
“These efforts, underpinned by Saudi Payments’ elaborate digital infrastructure developments, have positioned the Kingdom as a model in adopting cutting-edge modern payment services not only for the MENA region but also for the rest of the world. This is a great example of how close collaboration and regular dialogue between industry players and regulators can both accelerate the adoption of new payment technologies as well as significantly benefit consumers, businesses, government and the economic ecosystem, especially during a critical juncture where shopping behaviors have been altered because of the ongoing pandemic situation”, says Al-Afaleg.
Ali Bailoun, Visa’s General Manager in Saudi Arabia said that Saudi Arabia's rapid surge in contactless payments had surpassed expectations with the Kingdom recording among the highest NFC payment penetration and usage rates in the world today. “Even while the ongoing global health challenge has led contactless and other digital payment options to emerge as better, more efficient alternatives to cash, credit must be given to the foresight and collaboration of the Saudi government and public and private enterprises in developing cutting-edge infrastructure to support the evolving payment needs of consumers and merchants alike. This shift to the latest in digital payments technology in the Kingdom is ushering in a new generation of commerce that will help residents, businesses and the national economy to thrive”, explains Bailoun.
The whitepaper titled 'NFC Contactless adoption in Saudi Arabia 2020' tracks the evolution of contactless payments in the Kingdom from 2017 to 2020, analyzing the factors that have propelled the rapid growth in cardholders usage and its acceptance among merchants.
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1 Saudi Arabia achieves highest adoption of NFC contactless payments in MENA at 94% of all in-store payments | Visa (visamiddleeast.com)
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