The Business Year

Going  Cashless


Going Cashless


Saudi Payments' mandate is to develop a national payment infrastructure and provide the required interoperability to ensure all players have a level playing field as the country moves toward a cashless society.

Saudi Payments is a merger of SADAD and the Saudi Arabian Monetary Agency’s (SAMA) General Department of Payment Systems. Could you tell us more about the organization’s inception?

Saudi Payments might be a new organization in its name and branding, but its legacy goes back to 1985, when SAMA was founded with the establishment of the banking technology department. This department focused on developing a shared payments infrastructure. SAMA’s forward-looking vision for the need of a shared infrastructure was the impetus behind the center. The journey started in 1990 with the introduction of the national payment system, mada, formerly known as SPAN. In 1997, Saudi Arabia became one of the first countries to introduce electronic real-time gross settlement system (RTGS). In 2003, we introduced our electronic payment platform, SADAD, in addition to other smaller-sized projects in between. In 2018, Saudi Payments was established with the mandate to continue that legacy by developing a national payment infrastructure, serving banks and fintechs equally, and creating a level playing field. In short, we work on standardization, interoperability, and security, linking everyone and providing infrastructure. Other countries have similar setups, and global institutions such as the World Bank, the IMF, and the G20 Committee have recognized that interoperability and shared infrastructure are the key enablers of fintech. Without these, the barriers for entry are simply too high; it would potentially lead to mega players coming in and eating up the entire market. Our main KPI is not revenue-based; rather it is based on increasing the number of cashless payments.

What strategies do you have in place to achieve the vision of having a 70% cashless society by 2030?

To grow from 20% to 70% in one decade is an ambitious objective. From our global benchmarking, even the UK is only about 50%, and it is fairly advanced in digital payments. The most advanced societies are Sweden and Norway. That said, with the financial infrastructure in place, together with high rates of technology adoption, paints a promising picture. The pick-up of near-field communication (NFC) payments in 2018 was phenomenal, reaching 40% of all contactless transactions. Within one year, we are close to reaching western European levels. In addition, mobile payment adoption is high compared to other countries, and it was only introduced in late 2018. There are still some missing pieces, like a faster payments platform. A faster payments platform is our next megaproject and should be up and running by 2020. The nature of this program will require large changes to banking systems; we will adopt ISO20022. People are moving away from the old SWIFT messaging standard to that new ISO standard. The new systems have proven to reduce cash transfers and unleash a wave of innovation for fintechs in the UK, Singapore, and US.

How do you consider your role working with both banks and fintechs?

This is challenging because banks have long regarded us as their main deliverer, which we still are. From a regulatory perspective, our objective is to serve everyone. Banks realize that the ecosystem is changing, and they are taking different approaches. Some have already established technology departments to find suitable fintech partners, either directly through capital investment or through partnership or extending bank services to those fintechs. Luckily, the pie is large, and there is room for all banks and fintechs with a customer-centered approach.

What are your strategic priorities for the coming year?

We are focusing on achieving the Financial Sector Development Program targets set by SAMA and the Ministry of Finance. Aside from financial inclusion—which currently stands at 74% according to the World Bank—and the cashless transactions objectives, we are also working on an e-invoicing platform. Operationally, we aim to finalize the internal carve out from SAMA and be an independent organization.



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