29 Oct 2024
RIYADH: Saudi Arabia has achieved 98 percent adoption of contactless payments for in-person transactions, a leap from just 4 percent in 2017, according to a top Visa executive.
Speaking to Arab News on the sidelines of a forum ahead of the Future Investment Initiative event, Andrew Torre, Visa’s regional president for Central and Eastern Europe, Middle East, and Africa, attributed this rapid digital transformation to government support, rising consumer demand, and the company’s technological initiatives.
This aligns with Saudi Arabia’s Vision 2030 to boost digital commerce and create a global hub for innovation, enhancing Visa’s ability to co-create with partners in the Kingdom.
“If you look at face-to-face transactions in the Kingdom, they were previously with a card and it was chip and PIN; that’s completely changed, and now almost it’s in the high 90s,” Torre said on the sidelines of the FII New Africa Summit in Riyadh.
He continued: “It was 4 percent of transactions that were contactless in 2017, and now it’s 98 percent, and it’s either tapping with a card, but even more likely, also tapping with your phone, so those payments have become fully digital. One of the fastest we’ve seen in the world.”
In support of this shift, Visa has opened an innovation center and office in Riyadh’s King Abdullah Financial District, marking 40 years of the company’s presence in Saudi Arabia.
The facility, Visa’s fourth global center, aims to advance digital payment solutions using technologies like artificial intelligence, biometrics, and the Internet of Things, fostering collaboration with local fintechs, banks, and government entities.
Sultan Al-Obaida, the chief commercial officer of the KAFD Development and Management Co., highlighted the growth of the Saudi banking sector, which has seen robust growth — 9.3 percent in 2023 and 3.9 percent in the first quarter of this year.
“Our strong financial presence helps bolster Riyadh’s stature as a premier global financial center, drawing a distinguished array of fintechs, banks and payment players, and we are delighted to welcome Visa to this esteemed portfolio,” he said in a statement.
The Visa center leverages Saudi Arabia’s role as a leader in digital payment best practices, positioning the Kingdom as a hub for global fintechs to co-create and innovate, according to Torre.
“I’ll go back to — we’ve been in the Kingdom for 40 years, so we’re no strangers to it. When Vision 2030 came out, a big chunk of that revolved around digitizing financial services and digitizing payments. We’ve been very supportive with the government,” Torre said.
He added: “Our new innovation center enables us to co-create the future of payments with local partners, driving innovation that aligns with the Kingdom’s Vision 2030 goals.”
Torre said that Saudi Arabia’s fintech-friendly regulatory environment, led by the Saudi Central Bank, known as SAMA, has been instrumental in fostering digital evolution. SAMA’s early adoption of a sandbox for fintech testing has allowed new players to innovate in embedded finance and cross-border remittances.
“It has done really, really well — they’ve understood that you need to have innovation, and they’re fostering it through their sandbox approach. They were one of the very early adopters of a sandbox so they can work with fintechs,” Torre added.
Beyond in-person retail, e-commerce has seen a notable boost, growing at an annual rate of 30 percent. Torre attributed this to the pandemic’s acceleration of online shopping and the convenience it offers consumers.
The rise in digital payment adoption has also empowered small businesses, giving them access to secure and efficient transactions. “Digital payments provide visibility and ease, supporting small business growth,” said Torre.
Looking ahead, the Visa executive envisions a future where AI will make payments increasingly seamless, with technology handling transactions automatically based on user preferences.
“If you look at retail payments, which you said are now 70 percent digital, there’s still 30 percent that’s in cash. We see continued rapid adoption of digital payments, which will start to erode and take cash out of the ecosystem,” Torre said.
He added: “We think e-commerce continues to grow and accelerate. It is convenient, and we see it becoming more omnichannel as well.”
Visa’s engagement in Saudi Arabia showcases how collaboration between private companies and regulators can drive significant advances in digital payments, supporting the Kingdom’s goal of a cashless society.