Latest news with #SR197.42
Arab News
15-04-2025
- Business
- Arab News
E-payments account for 79% of Saudi retail transactions in 2024: SAMA
RIYADH: Electronic payments made up 79 percent of all retail transactions in Saudi Arabia in 2024, up from 70 percent the previous year, according to the Saudi Central Bank, known as SAMA. The increase marks a key milestone in the Kingdom's shift toward a cashless economy, aligning with one of the core objectives of the Financial Sector Development Program under Vision 2030. SAMA reported that the total number of non-cash retail transactions reached 12.6 billion in 2024, up from 10.8 billion in 2023, reflecting the continued growth and adoption of electronic payment systems across the country. In a statement, the central bank said this progress was the result of strategic efforts carried out in cooperation with the financial sector to advance the payments ecosystem and expand access to secure and innovative digital solutions. SAMA reaffirmed its commitment to enhancing payment infrastructure and supporting economic activities by fostering a more diversified and modern payment landscape. Digital push The broader shift toward e-payments has been reinforced by strong growth in both point-of-sale and e-commerce activity in recent years. According to SAMA data, the value of POS transactions has grown significantly, increasing by 24.15 percent annually in 2020, 32.45 percent in 2021, and by 8.83 percent in 2024, reaching SR668.18 billion ($178.18 billion). The surge in 2020 and 2021 reflects the pandemic's role in accelerating the shift toward contactless and digital payments, as consumers and businesses adapted to safety concerns and movement restrictions. While growth rates have normalized since then, the upward trend in 2024 suggests that post-pandemic behaviors have largely persisted, reinforcing long-term structural changes in how retail transactions are conducted in the Kingdom. This rise reflects not only the increasing consumer preference for digital transactions but also the rapid expansion of point-of-sale infrastructure across the Kingdom. In parallel, e-commerce spending using Mada cards has surged, jumping 278.68 percent annually in 2020 to reach SR38.82 billion. By 2024, that figure climbed to SR197.42 billion, representing a 25.82 percent year-on-year increase. The sustained growth highlights the growing role of online platforms in Saudi Arabia's retail and services sectors. Together, these trends underscore the broader momentum behind digital payments in the Kingdom, positioning Saudi Arabia as a leader in fintech innovation and financial transformation in the region.
Arab News
07-02-2025
- Business
- Arab News
Saudi e-commerce sales using Mada cards hit $53bn in 2024
RIYADH: E-commerce sales using Mada cards in Saudi Arabia reached SR197.42 billion ($52.64 billion) in 2024, a year-on-year growth of 25.82 percent, according to data from the Kingdom's central bank. Figures released by the institution showed that in December, sales totaled SR19.37 billion, representing a 42.06 percent increase compared to the same month in the previous year. These figures include payments for online shopping, in-app purchases, and e-wallet transactions, but exclude transactions using credit cards such as Visa and MasterCard. Mada, the Kingdom's national payment card system, supports both debit and prepaid services within its network. The cards utilize near-field communication technology for contactless payments, enabling secure transactions at both physical retailers and online. Mohammed Dhedhi, partner in the consumer and retail practice team at Kearney Middle East and Africa, told Arab News: 'The growing spending power in Saudi Arabia, driven by factors such as dual-income households and higher overall economic strength, is fueling market growth.' He added: 'Additionally, the proliferation of NFC-capable devices has significantly boosted the penetration of digital payment channels like Mada, further supporting the shift toward a more digital economy.' In addition to the surge in sales, the number of e-commerce transactions also experienced a significant rise, increasing by 28.86 percent year-on-year to nearly 1.13 billion transactions in 2024. December saw a 30.47 percent annual increase, reaching 105.73 million transactions. According to Dhedhi: 'Today, local Mada cards account for over 90 percent of cards issued in the country and over 95 percent of the total transactions made. One of the main reasons for Mada's popularity is because of how convenient it is to use.' He added that Mada is widely accepted both in-store and online across Saudi Arabia, providing secure transactions as it is operated by Saudi Payments, a subsidiary of the Saudi Central Bank. The growing adoption of Mada aligns with the government's push toward a cashless society, promoting the transition from cash to digital payments. Dhedhi explained that the COVID-19 pandemic significantly accelerated e-commerce penetration in Saudi Arabia, driving faster digital adoption across various sectors. This growth was further supported by increased investments from both regional and global players looking to expand their operations. He noted that in 2022, opened a Customer Fulfillment Center in Riyadh to improve delivery speed and meet the growing demand from consumers. Saudi Arabia's growing spending power, supported by factors including dual-income households and a robust economy, continues to drive market expansion. At the same time, the widespread adoption of NFC-enabled devices has propelled the use of digital payment solutions like Mada. As a result, the Kingdom is witnessing a rapid shift toward a more digital economy, with seamless and secure transactions becoming an integral part of the evolving e-commerce landscape. The rise in e-commerce activity aligns with Saudi Arabia's goal to make digital transactions account for 80 percent of the retail sector by 2030, with 70 percent conducted online by the same year. According to the International Trade Administration, the Saudi e-commerce market, valued at $5.15 billion in 2023, accounted for 6 percent of the Kingdom's $92.6 billion retail market. Dhedhi said: 'To improve online shopping experiences, Saudi Arabia's Ministry of Commerce has introduced reforms focusing on refunds, delivery options, and payment choices.' He added: 'These changes aim to address consumer concerns such as unclear warranties, limited delivery coverage, slow complaint resolutions, and delayed refunds. Retailers are now required to submit performance reports and conduct consumer awareness campaigns.' According to Dhedhi, Saudi Arabia's e-commerce market growth will be driven primarily by appliances and electronics, which will account for 23 percent of total growth, with a compound annual growth rate of 8 percent from 2024 to 2028. The fashion sector is expected to contribute 18 percent, also growing at 8 percent CAGR, while health and beauty will make up 14 percent, expanding at a much faster 16 percent CAGR. The dominance of electronics and appliances reflects a strong demand for advanced technology and gadgets, particularly among younger, tech-savvy consumers. In addition, the rising popularity of beauty and home care products aligns with an increasing focus on self-care and wellness across the Kingdom. Meanwhile, the food and beverage segment is projected to experience the highest growth rate at 25 percent CAGR, although its overall market size remains smaller compared to other leading categories, according to Dhedhi. 'The rise in food and beverage e-commerce reflects a growing demand for convenience. Quick commerce has been growing rapidly, and while it historically took players much longer to achieve profitability, the current focus on dark stores and improved unit economics is accelerating this process,' Dhedhi said. He also noted that while this shift has accelerated growth in the sector, it has also intensified competition. This dynamic ultimately benefits market players in Saudi Arabia by fostering innovation and enhancing service quality. According to the International Trade Administration, Saudi Arabia's digital economy is expanding rapidly, driven by substantial government investments and widespread adoption of emerging technologies. As of 2023, the Kingdom's Information and Communications Technology sector was the largest and fastest-growing in the Middle East and North Africa region, valued at $40.94 billion and contributing 4.1 percent of gross domestic product, the report stated. The Kingdom ranked second among G20 countries on the UN International Telecommunication Union's ICT Development Index in 2023, highlighting its strong digital infrastructure. Over the past six years, Saudi Arabia has invested $24.8 billion in this area, leading to a 99 percent internet penetration rate and mobile internet speeds of 215 megabits per second, nearly double the global average. These advancements place the Kingdom among the top 10 countries globally for mobile internet speed, according to the ITA. Saudi Arabia was an early adopter of 5G technology, with coverage reaching 77 percent of the country — significantly above the global average — and 94 percent in Riyadh, positioning it among the world's leading cities for 5G accessibility. This high-speed internet expansion is fueling growth in e-commerce, telecommunications, and digital services, the ITA added. The number of e-commerce users is projected to reach 34.5 million by 2025, with penetration rising from 66.7 percent in 2023 to 74.7 percent by 2027, according to the report. Digital payments are also surging, aligning with Vision 2030's goal of a cashless society. Electronic payments in retail transactions surpassed 57 percent in 2021, exceeding the 55 percent target set by the Financial Sector Development Program. This shift is expected to further accelerate e-commerce growth, attracting more investment in digital financial services. Dhedhi said: 'Millennials, who constitute around 50 percent of the population, are key drivers of e-commerce growth due to their digital fluency and tech-savviness.' He added: 'Expats, on the other hand, prioritize the delivery experience more than locals and show a strong preference for international brands or diverse product offerings, contributing to a broader assortment in the offerings.' Dhedhi said quick commerce players are tapping into the demand for fast delivery, affordable subscriptions, and influencer partnerships to target younger consumers. By offering low delivery costs, they are setting new convenience standards. Chinese e-commerce giants including Shein and Temu have successfully attracted Gen Z and millennials with trendy, affordable products, despite occasional compromises in product quality, he said. Urbanization and rising female workforce participation are further fueling the shift to online retail, with families increasingly relying on e-commerce for groceries, fashion, and household items. Dhedhi noted that these demographic shifts are broadening the customer base, diversifying consumer behavior, and fueling the expansion of Saudi Arabia's e-commerce sector, which plays a pivotal role in the Kingdom's economic transformation.
