Saudi Arabia is leading the way in contactless payment

With all these successful efforts to promote contactless payments, Saudi Arabia is deservedly one of the world leaders in the field of NFC payments

  
Image used for illustrative purpose.

Image used for illustrative purpose.

Getty Images

Saudi Arabia is implementing several measures to ensure the smooth digital transformation of its economy. The success of these steps can be gauged by the fact that the Kingdom recently reported a very high adoption rate of contactless payments through near-field communication (NFC) with 94 percent — the highest in the Middle East and North Africa, above the EU’s average and ahead of Hong Kong and Canada.

This featured in a white paper published by Saudi Payments, a fully owned subsidiary of the Saudi Central Bank, in partnership with Visa.

Entitled “NFC contactless adoption in Saudi Arabia 2020,” the document showed NFC penetration in the EU (80 percent), Hong Kong (79 percent) and Canada (76 percent), as well as in the MENA region, where Kuwait and the UAE had an 81 percent adoption rate.

The introduction of electronic payments in the Kingdom started in 1990 when SAMA launched the Saudi Payment Network system to encourage e-transactions.

Later, SAMA introduced other systems, such as SARIE in 1997, which provided a mechanism for all Saudi commercial banks to make and settle payments in Saudi riyals. Then came the SADAD payment system in 2005, which was the first national electronic bill presentment and payment service provider.

Saudi Payments was launched in 2019 to ensure the availability of secured, reliable, interoperable and accessible backend electronic services in the Kingdom.

The company serves banks and fintech companies by providing the required payments systems standardization, which ensures a level playing field for all systems providers.

As part of SAMA’s strategy, which is built on the goals of the Financial Sector Development Program of the Kingdom’s Vision 2030, it aims to reduce cash transactions by raising electronic payments to 70 percent of all transactions by 2025. To achieve this ambitious goal, SAMA has fully adopted NFC payments since 2016, taking strategic steps to authorize and facilitate e-payment transactions after ensuring the highest level of security in accordance with international standards and best practices.

SAMA has deployed the relevant infrastructure supporting NFC payments operations through close collaboration with Saudi Payments, payment services providers and banks. The operations include overhauling the national payment ecosystem and replacing all bankcards and point-of-sale terminals, as well as ensuring that all devices endorse the technology.

SAMA has taken several other key initiatives to pave the way for the rapid adoption of contactless payments in Saudi Arabia. It has increased the NFC transaction limit from SR100 ($27) to SR300 and enabled payment through smart devices. The Saudi authorities have also made it mandatory for all commercial establishments to get POS terminals installed at their facilities.

According to SAMA, public transport projects such as the Riyadh Metro will also adopt NFC in their payment operations, in a step that will align the Saudi public transport system with the latest payment technology.

With all these successful efforts to promote contactless payments, Saudi Arabia is deservedly one of the world leaders in the field of NFC payments.

• Talat Zaki Hafiz is an economist and financial analyst. Twitter: @TalatHafiz

Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News' point-of-view

Copyright: Arab News © 2021 All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

Disclaimer: The content of this article is syndicated or provided to this website from an external third party provider. We are not responsible for, and do not control, such external websites, entities, applications or media publishers. The body of the text is provided on an “as is” and “as available” basis and has not been edited in any way. Neither we nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this article. Read our full disclaimer policy here.

More From Technology