Market Insights & Analysis: Saudi Arabia Cards & Payments Market (2023-28)
The Saudi Arabia Cards & Payments Market is projected to grow at a CAGR of around 8.40% during the forecast period, i.e., 2023-28. A card is a piece of metal or plastic issued by a bank or other financial institution that allows users to withdraw money or make purchases online or in person. Payment instruments are used in card transactions as they enable funds held in accounts at credit, payment, or similar financial institutions to be transferred to a payee upon receipt of a payment order.
The factors attributing to the growth of cards & payments in Saudi Arabia are the surging adoption of technologies by the government to improve the digital infrastructure. The economy of Saudi Arabia has been reliant on oil for the past decade, and to diversify its economy, the government has launched a mission that states the investment plans to upscale the living of the residents by constructing leisure, attractions, and infrastructure of the country.
Moreover, the government also aims to promote cashless transactions in the country by mandating premium hotels, restaurants, etc., offering end-users the choice to make payments through any financial card like credit cards, debit cards, etc.
| Report Coverage | Details |
|---|---|
| Study Period | Historical Data: 2018-21 |
| Base Year: 2022 | |
| Forecast Period: 2023-28 | |
| CAGR (2023-2028) | 8.40% |
| Region Covered | Central, East, West, South |
| Key Companies Profiled | American Express, Visa, Mastercard, Saudi British Bank, One Card, Citibank, Diners Club, Hyperpay, Banque Saudi Fransi., Paypal, Others |
| Unit Denominations | USD Million/Billion |
The rising employment rate in the country has also increased the bankable population of the country since salaries are deposited in the bank. Moreover, the emerging advantages, such as quick & hassle-free transactions of the cards over traditional payment methods, such as via cash, etc., are also driving the demand for cards in Saudi Arabia. Additionally, consumers are inclining more towards the new emerging technologies such as touchless technologies that offer consumers to make payments in a go or without physical touch.
Therefore, to cater to the growing demand of end-users for these technologies, financial service companies are integrating & launching new cards. For instance, in 2021, iSTC Pay, a mobile wallet operated by Saudi Arabia’s biggest telco STC introduced contactless cards for use at point-of-sale (POS) machines, e-commerce transactions, and cash withdrawals at local and international ATMs. Therefore, the significant traction toward contactless technologies would further upsurge demand for new smart cards, therefore enhancing the Saudi Arabia Cards & Payments Market size in the forthcoming years.
Market Dynamics
Key Driver: Growing Digital Adoption by Medium-scale & Large-scale Enterprises to Augment the Market
Saudi Arabia is an oil-rich country & to diversify its financial resources, the government has laid down plans such as investment in construction projects, facilitation of public-private partnerships, and adoption of technologies to improve the digital infrastructure. The government launched Vision 2030, which encourages the adoption of digital payments via e-wallets, credit cards, debit cards, etc., to boost the digital economy of the country. This government-led vision has led medium-scale enterprises like prominent fast food outlets, hotels, etc., to accept digital payments via cards & wallets. Further, the bankable population of Saudi Arabia has also expanded over the past few years, as a result, the surge in consumers opting for conventional digital payment methods is enhancing. According to the King Khalid Foundation, in 2022, 72% of the population in Saudi Arabia possessed bank accounts. Therefore, the growing bankable population & the digital adoption by different sectors are amplifying the demand for cards & payment in Saudi Arabia.
Possible Restraint: Acceptance of Only Cash in Small Shops in Saudi Arabia Hinders the Market
Several Merchants in Saudi Arabia do not accept payments via credit cards, debit cards, etc., since they are charged an additional service or processing fee on every card payment. As the profit margin of the merchant is significantly lower, hence small shops ought not to accept digital payments. Additionally, the cash payment gives the merchant security of being paid by the consumers. However, in digital transactions, the merchant or business owner worries about failed transactions. Therefore, the local shop owners accept payment via cash only, restraining the market for banking cards.
In addition to this, opening bank accounts in the country requires individuals to have legal identification documents to verify their identities per international standards. Therefore, individuals that do not have valid mobility documents or residency permits are restricted to own a bank account or have banking cards.
Growth Opportunity: Growing Collaboration Between Financial Institutions & Tech-based Companies
The zero tax policies on the salaries withdrawn & lucrative job opportunities are propelling the young talent to mitigate to Saudi Arabia, as a result, the population of expatriates has been on the rise for the past few years. According to the government of Saudi Arabia, the total population of expatriates in the country reached over 13.5 million in 2021. Hence, the aforesaid has resulted in a notable upsurge in foreign payments since individuals send some share of their salaries to their native hometown. These foreign transactions are possible via different cards offered by the companies such as Visa, Mastercard, etc., hence the companies have started collaborating with the national bank of Saudi Arabia to provide different cash reward points & engage more consumers. For instance:
Therefore, the growing partnerships between the financial service provider & banking institutions to provide excellent banking experience owing to the progressing demand for rewarding credit cards as a more effective payment method for end-users & their growing interest in reward programs would further augment the market of banking cards in Saudi Arabia.
Key Trend: Integration of Smart Touchless Technologies Gaining Traction
Owing to the rising technological advancements, financial service providers & financial institutions comprising commercial banks & other investment banks are integrating new touchless technologies in credit cards, debit cards, fleet card, etc., to improve the user experience. These touchless technologies enable consumers to complete touch-free transactions with systems, thereby meeting health & safety requirements. Thus, to make the end-user experience seamless, the companies such as visa & master card are launching products like tap-to-go cards designed using these touchless technologies. This makes the payment simple & hence, preferred by consumers.
According to the company Visa, Saudi Arabia, in 2021, achieved the highest adoption rates for Near-Field Communication (NFC) contactless payment in the Middle East region. Consequently, the significant adoption of the new innovative tech in the financial sector as well as by the consumers is gaining traction & would further augment the market in the coming years.
Market Segmentation
Based on Type of Cards:
Of them all, the debit cards segment held the largest share in the historical years owing to the increasingly rising bankable population in the country. End-users now prefer cards for payments due to the additional benefits it provides, like reward points, cashback offers, etc., and enhanced security. Moreover, the debit cards under this category are the most preferred among money transactions.
Debit cards allow us to withdraw funds directly from an individual's bank account, which makes the consumer shop more responsibly. As per the data delivered by the financial consultant company Adyen in 2022, there are presently about 31 million cards that have been issued, out of which 88% are debit & 12% are credit. Therefore, the surging use of debit cards by consumers owing to the surging digital adoption in the country & rapid urbanization would further boost the share of debit cards in the forecast years.
Based on Application:
Among them, travel & tourism witnessed significant growth in the historical years since the transaction of money during international tours is only possible through limited means. Consequently, consumers prefer to use cards during travel. The cards offer seamless transactions even outside the country, offer convenience to the consumers, and save time for currency exchange, therefore travelers use cards for payment.
Further, the surging disposable income & the rising westernization in the country have led to a notable rise in the number of outbound tourists. According to the statistics from the government of Saudi Arabia, more than 8 million individuals visited other countries in 2021. Thus, the growing outbound tourism in the country due to several different purposes, like medical reasons, business travel, etc., would also enhance the demand for cards for foreign payment in the forthcoming years.
Regulatory Landscape
In 2021, Saudi Arabian Monetary Agency (SAMA) updated the rules for Bank accounts. The regulations stated that the bank should issue credit cards to a selected, limited category of non-resident foreigners employed by prominent Saudi companies having a relationship with the bank. The company shall provide the bank with the agreement, signed by the company & its employees, to determine the responsibility regarding issuing & using credit cards. Hence, compliance with these regulations by the banks like AlAhli Bank, Saudi Arabia central Bank, etc., would serve as a prospect for the banks to expand their services to the expatriates residing and working in Saudi Arabia. Therefore, the market in Saudi Arabia would presumably witness growth in the upcoming years.
Recent Development in Saudi Arabia Cards and Payments Market
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Frequently Asked Questions
A. The growth rate or CAGR of the Saudi Arabia Cards & Payments Market during 2023-28 is around 8.40%.
A. Growing digital adoption by medium-scale & large-scale enterprises is expected to drive the Saudi Arabia Cards & Payments Market during 2023-28.
A. Some of the prominent players in the Saudi Arabia Cards & Payments Market, are American Express, Visa, Mastercard, Saudi British Bank, One Card, Mada, Arab National Bank, Saudi National Bank, Banque Saudi Fransi., Emkan Finance, Others (Samba Financial Group, Alinma Bank, etc.).
A. The leading type is cards in the Saudi Arabia Card & Payments Market.
A. Integration of smart touchless technologies gaining traction is the key trends shaping the growth of the Saudi Arabia Cards & Payments Market.
A. The individuals are the key end-users of the industry.
A. Growing collaboration between financial institutions & tech-based companies are the growth opportunities driving the Saudi Arabia Cards & Payments Market through 2028
