Nadin Hassan
RIYADH: Imagine a bustling Riyadh souk where every transaction is just a tap away — no more searching for loose change or waiting for cashiers. In Saudi Arabia, this digital dream is becoming a reality as the Kingdom experiences a high-tech makeover of its financial landscape.
With smartphones buzzing and government-backed innovations steering the way, the shift from traditional cash to sleek digital payments is transforming the way Saudis shop, bank, and spend.
This evolution reflects a broader trend within the region and underscores Saudi Arabia’s commitment to embracing technological advancements as part of its Vision 2030 initiative.
The rise of e-payments in the Kingdom is driven by several factors, including increasing smartphone usage, supportive government policies, and changing consumer preferences.
A vision for digital transformation
At the heart of Saudi Arabia’s e-payment revolution is the Vision 2030 initiative, which seeks to boost non-cash transactions to 80 percent by 2030.
This ambitious goal is not just a numerical target but a strategic move to foster financial inclusion and digital innovation.
“The consistent growth of e-payments and financial technology within the Saudi retail sector has been impressive, especially over the past few years,” Tariq bin Hendi, senior partner at Global Ventures told Arab News.
He added that Vision 2030 has “played a major role in this transformation,” particularly with its emphasis on digitalization and financial inclusion.
“This approach has created a strong environment for innovation, allowing local, regional and international fintech players to thrive,” said Bin Hendi.
He also noted that proactive government policies that support digital transactions, along with strategic partnerships among banks, fintech companies, and retailers that enhance payment systems, have helped drive the transformation, as well as substantial investments in cybersecurity to protect against fraud.
Additionally, the development of innovative payment solutions and a consumer base increasingly favoring digital methods have helped drive the commerce shift, creating a dynamic and secure environment for e-payments to flourish.
Smartphone penetration: A game changer
One of the most significant drivers of this digital payment surge is the proliferation of smartphones.
“With smartphone adoption reaching over 90 percent of the population, it is safe to say the increasing penetration of mobile phones in Saudi Arabia has played an integral role in the exponential growth of e-payments,” Bin Hendi said.
This means that smartphones have become the main tool people use to carry out digital financial transactions, such as making payments or managing their finances online.
Abdulrahman Al-Dakheel, CEO of online fintech platform Taskheer, echoed this view, telling Arab News: “The high penetration of smartphones in Saudi Arabia has been a critical enabler for the growth of e-payments. With the majority of the population owning smartphones, there’s been a natural shift toward mobile-based transactions.”
He added: “Advancements in mobile technology, such as Near Field Communication and biometric authentication, have enhanced the security and convenience of mobile payments, making them more attractive to consumers.”
Al-Dakheel further explained that the creation of mobile wallets and apps that work smoothly with banking services has made it easier for people to make digital payments.
This convenience is especially popular among younger, tech-savvy individuals who value the flexibility and simplicity of using their smartphones for routine financial transactions.
Role of international partnerships
International collaborations are also crucial for the advancement of Saudi Arabia’s e-payment infrastructure. Partnerships with global fintech leaders and regulatory bodies facilitate the exchange of knowledge and technology, accelerating local development.
“International partnerships and collaborations are key. Alliances with global leaders in the fintech space and international regulatory bodies help facilitate an exchange of knowledge and technology — thus accelerating the development of local capabilities,” Global Ventures’ Bin Hendi said.
He added: “Insight into global best practice can help the Kingdom build the next phase of growth into a more robust, innovative and secure e-payment environment.”
By adopting global best practices and tapping into the expertise of established international fintech companies, Saudi Arabia can speed up the development and implementation of advanced payment technologies.
“For example, partnerships with leading fintech companies from regions like Europe, known for their mature digital payment ecosystems, could provide valuable insights into implementing advanced solutions such as open banking and real-time payments,” Al-Dakheel said.
He continued: “Additionally, collaboration with countries that have successfully transitioned to cashless societies, like Sweden or Singapore, could offer models for regulatory frameworks and consumer education initiatives that Saudi Arabia can adapt to its local context.”
These partnerships help not only in advancing technology but also in creating a culture of innovation necessary for the growth of e-payments.
What happens next?
Looking ahead, the trajectory of e-payments in Saudi Arabia appears poised for continued growth.
When asked how he envisions the future trajectory of e-payments in Saudi Arabia’s retail sector, Bin Hendi underlined that given the current rapid growth in electronic payments, it is expected that they will increasingly dominate retail transactions in the future.
“If current trends persist, we could see e-payments accounting for up to 85-90 percent of all retail transactions within the next five years,” Al-Dakheel said.
He added: “This growth will likely be driven by continued investments in fintech innovation, broader merchant acceptance, and ongoing government support for cashless transactions.”
Al-Dakheel went on to say that as consumers become more accustomed to the convenience and security of e-payments, the demand for digital solutions will only increase, further accelerating this shift.
“Given that e-payments currently account for 70 percent of all retail transactions in Saudi Arabia, I only expect it to continue to grow — especially given the increase in mobile use and digital literacy among a young population,” Bin Hendi said.
He added: “Driven by consumer demand, convenience, and continuing advancements in mobile technology, I also envision more growth in the use of digital wallets and contactless payment methods.”
Bin Hendi also highlighted that in 2023, 10.8 billion electronic transactions were recorded, compared to 8.7 billion in 2022, emphasizing the positive trend of e-payments.
Saudi Arabia’s e-payment revolution is a testament to the country’s dynamic approach to financial modernization.
Driven by government initiatives, technological advancements, and a supportive regulatory environment, the shift from cash to digital transactions is not just a trend but a fundamental transformation.
As the Kingdom progresses toward its Vision 2030 goals, the e-payment sector is set to play a pivotal role in shaping the future of financial transactions in Saudi Arabia.