Although cash, and the way it has been embedded in people’s buying behavior over the decades, is still a hindrance to the pace of digital payments transformation in the Kingdom, Saudi Arabia is on the right track and building momentum to benefit from a growing digital economy, according to J.K. Khalil, country manager for Saudi Arabia, Bahrain & Levant Mastercard.
After generations of paying with banknotes and handling hard legal tender in a way that was inherent to this region and its culture, cash is on its last leg and very quickly becoming less of a hindrance to Saudi Arabia, which is undergoing an accelerated digital payments ecosystem transformation while building momentum to benefit from a growing digital economy.
He said that since the launch of Vision 2030 and the country’s bold mandate to work toward a 70 percent cashless economy, the Kingdom has recalibrated its approach and significantly enhanced its digital infrastructure. “All this points to a fertile ground for development of the digital payment ecosystem, including transit, citizen-to-government and account-to-account payments,” said Khalil.
Khalil went on to explain why digital payments and contactless transactions are indeed the future.
“Broadly speaking, digital payments are closely linked to our collective prosperity and ability to create the economic growth that we need — sustainable growth that can positively include and reach everyone. Considering the coronavirus pandemic, digital payments have also been crucial to maintain livelihoods — by selling online, businesses can maintain revenues, by buying with contactless cards, people can stay safe, and by digitizing more of its economic output, governments can reduce the cost of cash and add that to GDP. At Mastercard, we are incredibly passionate about growing the digital economy and it is inextricably linked to our vision to create a thriving world beyond cash, in which everyone can flourish,” he said.
Commenting on the recent digital payment developments in the Kingdom, Khalil highlighted Mastercard’s partnership with Saudi Payments, which enabled 30 million debit cardholders to shop online for the first time. Another exciting development, he said, was the launch of real-time payments in the Kingdom, which enables account-to-account payments to be made instantly between financial institutions, businesses and consumers, which was the result of a partnership between Saudi Payments with Vocalink, a Mastercard company. “This new technology will positively impact the Kingdom’s economy by upgrading its payments infrastructure to best in class globally, significantly speeding up digital commerce and enabling newer fintechs and financial institutions to take advantage of the benefits of a digital economy, making new advancements such as open banking and QR even more interesting to deploy,” Khalil added.
“Furthermore, the launch of mada Pay marked Saudi Arabia’s first tokenized multi-issuer mobile payment solution with contactless functionality, and one of the first of its kind globally. mada Pay offers the convenience of fast and safe payments at near-field communication (NFC)-enabled point of sale terminals across thousands of merchants. The continuing potential for contactless payments is very exciting.
Contactless payments have grown fast amidst pandemic restrictions, and this change is here to stay. In Mastercard’s recent consumer sentiment survey, 81 percent of Saudi respondents said they will continue to use contactless payment methods post-pandemic and 84 percent said contactless methods have been easy to adopt.
“The thing with contactless payments is that in addition to being safe and secure, they’re also very convenient, and over the past few months, many Saudis have become used to contactless payments — something that, in other circumstances, perhaps might only have happened in two or three years from now. Contactless allows cardholders to avoid touching card machines by simply hovering their card, mobile phone or smart watch over the payment device. Additionally, contactless payments also have the advantage of being 10 times faster than other direct payment methods, allowing customers to enter and leave stores in less time, and merchants to get better at reducing queues and increasing customer satisfaction at checkout,” said Khalil.
He said digital payments — from e-commerce and cards, to contactless payments, digital wallets and mobile money solutions — are the future. “With more connectivity than ever before and micro-payments becoming more ubiquitous, we believe digital payments will continue to grow over the next decade,” Khalil added.
Elaborating on Mastercard’s role in the growth of digital payments, the country manager said: “At Mastercard, our multi-rail approach to payments is at the heart of how we positively influence the futureproofing and growth of the digital economy. We believe that supporting and participating in as many payments flows as possible allows us to stay ahead of the changing landscape, influencing and encouraging interoperability and openness, while prioritizing security technology, thereby delivering convenience and choice to consumers, businesses and governments across all channels.”