FinTech: How The Pandemic Stifled Use Of Cash In Saudi Arabia
Saudis used less cash and ATMs during 2020. But digital transactions surged.
The pandemic triggered a significant shift in the way Saudis used money during 2020. They wholeheartedly embraced online shopping, resulting in a 75% jump in digital payments. On the other hand, cash drawn from ATMs, and its use at payment points, fell sharply by 30%. (ARAB NEWS)
Payments at Points-of-Sale (POS) devices
Talat Zaki Hafiz, economist, and secretary-general of the media and banking awareness committee for Saudi banks revealed that the total number of the PoS operations in 2020 amounted to about 2.8 billion, an increase of 75 percent compared with the same period in the previous year.
The sharp rise showed that Saudis were increasingly using electronic, non-cash forms of payment such as credit or debit cards in preference to physical currency. This may have to do with fears of virus contagion through handling cash notes.
Further, during 2020, the number of POS devices in the Kingdom rose 70% to over 700,000.
In terms of transaction value, the payments processed on POS rose 24.1% during 2020 to SR349 billion ($93.7 billion).
“These statistics and indices confirm the increasing and steady demand by people and businesses to use e-payment technologies through PoS devices,” Hafiz said. “The measures taken by the government in various sectors, including health and banking, to encourage e-payments have had positive effects and helped to reduce the negative impact of the coronavirus on the country and its people, including businesses.”
Saudi Arabia: Cash on the back foot
On the flip side of the coin, Saudis wound down the use of cash during 2020. This was apparent from the statistics relating to cash withdrawals, which plunged by over 318 million, or 30%.
Though the pandemic played a role in the pivot towards non-cash, demographics played a role too. According to Hafiz, since over 60% of Saudis are of age under 30, they are more amenable to technology and electronic transactions.
A new Mastercard study also revealed a rapid shift toward digital payments in Saudi Arabia. It found that 77 percent of consumers in the Kingdom were spending more money online since the onset of the pandemic.
“It is clear from the research that shoppers are rapidly moving toward online retail and opting for contact-free and digital transactions,” said J.K. Khalil, Country Manager — Saudi Arabia, Bahrain and Levant, Mastercard. “This, in turn, is presenting e-retailers and businesses in the Kingdom, and across the region, with new challenges on how to best leverage the shift toward online shopping and deliver fast, convenient, and secure transactions.”
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