Saudi Arabia achieves yet another milestone through instant payment
The Kingdom’s new instant payment system (IPS) has been officially launched throughout the country by the Saudi Central Bank (SAMA) following successful trials by several banking organizations.
The system will allow financial institutions, companies, and individuals to complete transactions instantaneously across various banks, around the clock.
Financial exchanges, such as money transfers between bank accounts, will be easier, quicker, and no longer constrained by the official operating hours of the Saudi Arabian Riyal Interbank Express (SARIE).
The SARIE system began operating in May 1997 to provide a mechanism for all Saudi commercial banks to make and settle payments in Saudi riyals.
One of the main benefits of the new IPS — that will add a new layer to SARIE — is that it will require a smaller number of steps to complete money transfer transactions for new users.
SAMA has previously stipulated the maximum fees, which may be charged to customers making money transfers. If the transaction is activated electronically (such as internet banking) the fee is SR7 ($1.87) for a same-day transfer and SR5 for a next-day transfer. If the transfer is made through physical bank branches, the same-day fee is SR25 and SR15 for next day.
The central bank predicted that the activation of the IPS would enhance economic growth by increasing the efficiency of financial transactions between all parties in the corporate and retail sectors. It also noted that efficiency improvements would lower operating costs to financial institutions, reducing the cost of transferring money to banks’ customers.
The IPS is a great achievement by SAMA and the Saudi Payments company and is part of their long-standing efforts to digitize the Kingdom’s financial and banking transactions in line with the goals and objectives of the Vision 2030 reform plan’s financial sector development program.
The new system will also be an excellent addition to the state-of-the-art payment and settlement systems already in place, such as SARIE.
Its introduction is a major milestone in the history of payment systems in Saudi Arabia. It will help to promote safety and improve efficiency for the main stakeholders in the Kingdom’s development of its financial ecosystem, including SAMA, Saudi Payments, and all the financial institutions and customers who will benefit from this latest development.
• Talat Zaki Hafiz is an economist, financial analyst, and board member of the Saudi Financial Association. Twitter: @TalatHafiz