Digital payments in Saudi Arabia surge by 75% amid pandemic

 Digital payment transactions in the Kingdom jumped by 75 percent in 2020 as Saudi consumers embraced online shopping during the coronavirus (COVID-19) pandemic. (Shutterstock/File Photo)
Digital payment transactions in the Kingdom jumped by 75 percent in 2020 as Saudi consumers embraced online shopping during the coronavirus (COVID-19) pandemic. (Shutterstock/File Photo)
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Updated 08 January 2021

Digital payments in Saudi Arabia surge by 75% amid pandemic

 Digital payment transactions in the Kingdom jumped by 75 percent in 2020 as Saudi consumers embraced online shopping during the coronavirus (COVID-19) pandemic. (Shutterstock/File Photo)
  • Number of cash withdrawals fell by a third in 2020

RIYADH: Digital payment transactions in the Kingdom jumped by 75 percent in 2020 as Saudi consumers embraced online shopping during the coronavirus (COVID-19) pandemic, while cash withdrawals from ATMs and other payment points fell 30 percent over the same period.

Point of sale (PoS) refers to a place where customers can execute payments for goods or services. This can be a credit card in a clothes store, a digital payment in a coffee shop or through a food delivery app.

Speaking to Arab News, Talat Zaki Hafiz, economist and secretary-general of the media and banking awareness committee for Saudi banks, said: “The total number of the PoS operations in 2020 amounted to about 2.8 billion, an increase of 75 percent compared with the same period in the previous year.”

The value of operations amounted to about SR349 billion ($93.7 billion), an increase of nearly 24.1 percent compared with the same period in 2019, he said.

Consequently, the number of PoS devices operating in the Kingdom rose sharply by the end of 2020 to more than 700,000, an increase of about 70 percent since the beginning of the year.

As consumers turned to online and digital non-contact payments during the pandemic, the number of cash withdrawals carried out in 2020 across the Kingdom dropped by more than 318 million, or about 30 percent year-on-year.

“These statistics and indices confirm the increasing and steady demand by people and businesses to use e-payment technologies through PoS devices,” Hafiz said.

“The measures taken by the government in various sectors, including health and banking, to encourage e-payments have had positive effects and helped to reduce the negative impact of the coronavirus on the country and its people, including businesses.”

He said that the trend of increased online shopping and e-payment will continue even after the coronavirus crisis ends.

More than 60 percent of Saudis are under 30, “which means that society is more geared toward electronic dealings and electronic banking,” he added.

Hafiz said that a main objective of the Financial Sector Development Program (FSDP) — one of 13 executive programs launched by the Council of Economic and Development Affairs to achieve the objectives of Saudi Vision 2030 — is to reduce the amount of cash being used in the Kingdom by developing the national finance infrastructure to allow a transition to e-payments.

Moving toward a cashless society will deliver multiple benefits for the Saudi economy, including cost reductions associated with printing traditional money, as well as providing greater transparency in government monitoring of cash flows for taxation purposes and combating commercial concealment, he said.

Non-cash transactions are expected to make up to 70 percent of all transactions by 2030, Hafiz said.

Evidence of the growing preference for e-commerce over cash was seen during the Black Friday sales late last year. A survey carried out by advertising platform Criteo of 900 Saudi online consumers found that around 40 percent of respondents said they planned to buy more products online, with household products, groceries, and beauty and hygiene items proving most popular.

Alistair Burton, country manager MEA at Criteo, said: “The events of 2020 made it an extraordinary year for e-commerce. Our research shows that this year consumers will swap door-buster deals for online discounts that start sooner and last longer.”

Overall, the research found that 58 percent of Saudi respondents were more comfortable shopping online in 2020 than in-store.

The surge in online interest has not only helped the banking sector. In November, Amazon announced it had created 3,400 new jobs across the Kingdom, with 60 percent of the positions going to Saudi nationals.

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IMF chief sees ‘high degree of uncertainty’ in global outlook

IMF chief sees ‘high degree of uncertainty’ in global outlook
Updated 34 min 42 sec ago

IMF chief sees ‘high degree of uncertainty’ in global outlook

IMF chief sees ‘high degree of uncertainty’ in global outlook
  • IMF had rapidly increased concessional financing to emerging market and developing economies

WASHINGTON: The head of the International Monetary Fund on Monday said the global lender needed more resources to help heavily indebted countries, citing a highly uncertain global economic outlook and a growing divergence between rich and poor countries.
IMF Managing Director Kristalina Georgieva, who has long advocated a new allocation of the IMF’s own currency, Special Drawing Rights (SDRs), said doing so now would give more funds to use address both the health and economic crisis, and accelerate moves to a digital and green economy.
Under outgoing President Donald Trump, the United States, the IMF’s largest shareholder, has blocked such a new SDR allocation, a move akin to a central bank printing money, since it would provide more resources to richer countries since the allocation would be proportionate to their shareholding.
Swedish Finance Minister Magdalena Andersson, the new chair of the IMF’s steering committee speaking at an online news conference with Georgieva, said it was clear the need for liquidity remained great, and she would consult with member countries on options for expanding liquidity.
Andersson, the first European to head the International Monetary and Financial Committee in more than 12 years and the first women, started her three-year term in the role on Monday.
Georgieva said the IMF had rapidly increased concessional financing to emerging market and developing economies, including through donations by member countries of some $20 billion in existing SDRs. That would continue to play an important role, but further steps were needed, she said.
“It will continue to be so important, even more important, for us to be able to expand our capacity to support countries that have fallen behind,” Georgieva said.
She said a new SDR allocation had never been taken off the table by IMF members, she said, adding that some members continued to discuss it as a possible move. A possible sale of gold from the IMF’s reserves would have “some opportunity costs” for the IMF, but would be up to members, she said.
She said she expected the Group of 20 major economies to extend the current moratorium in official debt service payments by the poorest countries, now slated to end in June, but much would depend on the pace of vaccinations in coming months.