Saudi Arabia's Shift to Electronic Payments: 16% Surge in Credit Card Loans to SR27.25 Billion in Q1 2024
In the first quarter of 2024, Saudi Arabia experienced a 16% increase in credit card loans, reaching SR27.25 billion ($7.3 billion).
This trend indicates a shift towards cashless payment options in the Kingdom, according to the Saudi Central Bank's data.
Ravi Sharma, a banking and payments analyst from GlobalData, highlighted the decline in cash usage and the rising preference for electronic payments in Saudi Arabia.
GlobalData's payment card analytics showed that card payments value in Saudi Arabia grew by 17.8% in 2022 and 9.7% in 2023, reaching SR511.5 billion.
Saudi Arabia has a strong digital payment infrastructure, with a growing card market and widespread card acceptance.
The government is pushing merchants to offer at least one electronic payment option besides cash.
The rise in credit card loans can be linked to new collaborations, such as Mastercard teaming up with Loop to issue Bank Identification Numbers for credit cards.
These BINs help determine the issuing bank and expedite transactions, while also protecting cardholders from identity theft and fraud.
The text discusses the introduction of innovative digital payment solutions in Saudi Arabia, which aim to simplify and secure transactions for consumers, merchants, and fintech companies.
This development is timely as the country's SME sector and fintech community are growing.
However, SAMA data shows a modest 1% increase in consumer loans, totaling SR451 billion in Q1 2023.
Notable loan categories include education loans, up 24% to SR8 billion, and travel and tourism loans, up 19% to SR990 million.
Consumer loans allow borrowers to obtain a fixed amount of money, repayable over a set period with interest, often featuring lower rates than credit card loans.
The text discusses the differences between consumer loans and credit card loans.
Consumer loans offer a set repayment plan for borrowed money, helping individuals manage debt effectively.
In contrast, credit card loans do not have a fixed repayment period, allowing borrowers to make minimum payments over time.
The text highlights the convenience and flexibility of credit card loans, which enable purchases and expense management without the need for cash.
Additionally, credit card loans often come with rewards programs, cashback incentives, and other perks, providing extra benefits to cardholders.