14 April 2014
Saudi Arabia's cashless journey has been significantly spurred along by government leadership.
Regulations mandating wages assignment of employees to bank accounts has vastly increased access to electronic payment methods for the Saudi population over a short period of time, Khalid Hariry, market manager for MasterCard in Saudi Arabia, Bahrain and Yemen, told Arab News in an interview.
Highlighting the activities of MasterCard in the region, Hariry said: "These changes, coming alongside initiatives to spur acceptance and a push to migrate payments made during Haj and Umrah pilgrimages, can be expected to shift a substantial share of consumer payments away from cash in the coming years."
According to the Cashless Journey study findings, with a readiness score of 57, Saudi Arabia has eliminated many of the typical macro-economic barriers for going cashless. However, low rates of financial inclusion, indicated by the Kingdom 's majority unbanked population, may continue to have an adverse impact on the growth of cashless payments.
With a trajectory indicator of 30, Saudi Arabia seems to be moving at a better than average pace on its cashless journey and the key reason for reduced cash share appears to be a substantial shift from cash to debit cards between 2006 and 2011. The share indicator score for Saudi Arabia is 19, which puts the market in a category of countries that advisers refer to as Inception -- countries that are just starting their cashless journey.
Speaking about his company's activities in the Kingdom, Hariry said Saudi Arabia is a vital market for MasterCard driven by the growth and appetite for electronic payment solutions.
"Given that MasterCard is a technology company in the global payments industry, and not just a credit card company, our healthy growth in Saudi Arabia is a good reflection of consumers' adoption of payment solutions."
At MasterCard, he added: "We are deeply committed to the Saudi market. We work closely with our stakeholders to develop innovative products and solutions that offer consumers in the country meaningful benefits. We provide support to our customers, the financial institutions, by assisting with the development of products and offering a wide variety of payment solutions and technologies to appeal to all consumers."
Hariry indicated that MasterCard is very optimistic about the many opportunities that the market offers, and will continue to invest in this buoyant market. "We are recruiting and training young Saudi talent to join our team in Riyadh as we grow our presence in the Kingdom. Recruits are exposed to a truly multinational culture and working environment."
In Saudi Arabia, as is the case across the region, though usage of debit cards is growing by double digits, the growth in credit cards is taking place at a slower pace. "We are also seeing a significant increase in prepaid card growth, but this growth is developing from a very low base, he said.
The high representation of youth in Saudi Arabia also is driving the adoption of innovation and convenient means of payment, which results in high usage of electronic payments by merchants as well as healthy growth of e-commerce, he added.
According to Hariry, the Kingdom is experiencing very healthy spending behavior overall, which is supported by the Saudi Arabian Monetary Agency's (SAMA) measured approach and the efforts of banks to educate merchants and cardholders on the value of electronic payments.
MasterCard has been tracking luxury spends and the affluent segment in the region for 26 years. The region's large affluent segment represents a sizable and significant opportunity for both MasterCard and the financial institutions, he said.
"Affluent consumer values are evolving from the material to the experiential, and this is also driving the development of new and unique payment solutions," he added.
Today, affluent consumers want their cards to provide recognition and exclusivity, preferential access and treatment, as well as global acceptance and exceptional service. "We are responding to these evolving needs by creating and deploying new, differentiated product solutions for consumers in Saudi Arabia," he said.
"We announced the launch of a first-of-its-kind World Elite MasterCard Credit Card with Riyad Bank last year. The Shariah-compliant Riyad Bank World Elite MasterCard Credit Card is plated with pure gold, and will be offered on an invitation-only basis to Riyad bank's VIP customers. World Elite is MasterCard's experience-based service platform for affluent customers, and delivers a mix of benefits and rewards, unmatched world travel and lifestyle expertise and global acceptance," Hariry said.
Overall, he added, MasterCard is very optimistic about the future of the market. The Kingdom is experiencing a very healthy spending behavior overall, which we expect to continue going forward.
MasterCard's Index of Consumer Confidence also reflects positive sentiment from consumers' side.
Consumers in Saudi Arabia are extremely optimistic in their overall consumer confidence outlook, with a score of 95.2.
Consumers are optimistic about all indicators measured in the index, with regular income (98.8) receiving the most positive score, followed by employment (97.6), economy (97.3), stock market (93.5) and quality of life (88.9).
Saudi Arabia's cashless journey has been significantly spurred along by government leadership.
Regulations mandating wages assignment of employees to bank accounts has vastly increased access to electronic payment methods for the Saudi population over a short period of time, Khalid Hariry, market manager for MasterCard in Saudi Arabia, Bahrain and Yemen, told Arab News in an interview.
Highlighting the activities of MasterCard in the region, Hariry said: "These changes, coming alongside initiatives to spur acceptance and a push to migrate payments made during Haj and Umrah pilgrimages, can be expected to shift a substantial share of consumer payments away from cash in the coming years."
According to the Cashless Journey study findings, with a readiness score of 57, Saudi Arabia has eliminated many of the typical macro-economic barriers for going cashless. However, low rates of financial inclusion, indicated by the Kingdom 's majority unbanked population, may continue to have an adverse impact on the growth of cashless payments.
With a trajectory indicator of 30, Saudi Arabia seems to be moving at a better than average pace on its cashless journey and the key reason for reduced cash share appears to be a substantial shift from cash to debit cards between 2006 and 2011. The share indicator score for Saudi Arabia is 19, which puts the market in a category of countries that advisers refer to as Inception -- countries that are just starting their cashless journey.
Speaking about his company's activities in the Kingdom, Hariry said Saudi Arabia is a vital market for MasterCard driven by the growth and appetite for electronic payment solutions.
"Given that MasterCard is a technology company in the global payments industry, and not just a credit card company, our healthy growth in Saudi Arabia is a good reflection of consumers' adoption of payment solutions."
At MasterCard, he added: "We are deeply committed to the Saudi market. We work closely with our stakeholders to develop innovative products and solutions that offer consumers in the country meaningful benefits. We provide support to our customers, the financial institutions, by assisting with the development of products and offering a wide variety of payment solutions and technologies to appeal to all consumers."
Hariry indicated that MasterCard is very optimistic about the many opportunities that the market offers, and will continue to invest in this buoyant market. "We are recruiting and training young Saudi talent to join our team in Riyadh as we grow our presence in the Kingdom. Recruits are exposed to a truly multinational culture and working environment."
In Saudi Arabia, as is the case across the region, though usage of debit cards is growing by double digits, the growth in credit cards is taking place at a slower pace. "We are also seeing a significant increase in prepaid card growth, but this growth is developing from a very low base, he said.
The high representation of youth in Saudi Arabia also is driving the adoption of innovation and convenient means of payment, which results in high usage of electronic payments by merchants as well as healthy growth of e-commerce, he added.
According to Hariry, the Kingdom is experiencing very healthy spending behavior overall, which is supported by the Saudi Arabian Monetary Agency's (SAMA) measured approach and the efforts of banks to educate merchants and cardholders on the value of electronic payments.
MasterCard has been tracking luxury spends and the affluent segment in the region for 26 years. The region's large affluent segment represents a sizable and significant opportunity for both MasterCard and the financial institutions, he said.
"Affluent consumer values are evolving from the material to the experiential, and this is also driving the development of new and unique payment solutions," he added.
Today, affluent consumers want their cards to provide recognition and exclusivity, preferential access and treatment, as well as global acceptance and exceptional service. "We are responding to these evolving needs by creating and deploying new, differentiated product solutions for consumers in Saudi Arabia," he said.
"We announced the launch of a first-of-its-kind World Elite MasterCard Credit Card with Riyad Bank last year. The Shariah-compliant Riyad Bank World Elite MasterCard Credit Card is plated with pure gold, and will be offered on an invitation-only basis to Riyad bank's VIP customers. World Elite is MasterCard's experience-based service platform for affluent customers, and delivers a mix of benefits and rewards, unmatched world travel and lifestyle expertise and global acceptance," Hariry said.
Overall, he added, MasterCard is very optimistic about the future of the market. The Kingdom is experiencing a very healthy spending behavior overall, which we expect to continue going forward.
MasterCard's Index of Consumer Confidence also reflects positive sentiment from consumers' side.
Consumers in Saudi Arabia are extremely optimistic in their overall consumer confidence outlook, with a score of 95.2.
Consumers are optimistic about all indicators measured in the index, with regular income (98.8) receiving the most positive score, followed by employment (97.6), economy (97.3), stock market (93.5) and quality of life (88.9).
© Arab News 2014
