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Thursday, May 19, 2022

Saudi Arabia sees major growth in NFC payments

Saudi Arabia sees major growth in NFC payments

95% of 2021 total POS Transactions
In light of the quantum leap in financial technologies and related sectors, the Kingdom of Saudi Arabia has witnessed remarkable progress in near-field communication (NFC) payment transactions, via mobile devices and cards.

NFC adoption saw a record y-o-y increase of 95% in 2021, as per the latest numbers published by Saudi Arabia’s national payments infrastructure operator, Saudi Payments. The volume of these transactions reached more than 5.1 billion, valued at over SAR473 billion, accounting for 95% of total POS transactions, up from 88% in 2020.

These results further confirm Saudi Arabia's leading global position in this field. In a 2020 Visa study, Saudi Arabia’s NFC penetration ranked above the European average (80%), and higher than Canada (76%) and Hong Kong (79%). In the MENA region, the Kingdom came first in NFC payments adoption, followed by Kuwait (81%) and the United Arab Emirates (81%).

Mobile payments, in particular, highlight the massive growth in NFC transactions, as they accounted for 35% of all transactions in 2021. These payments represented only 22% of all transactions in 2020. Moreover, the volume of mobile payments reached more than 1.8 billion transactions with a value of more than SAR128 billion, representing 182% y-o-y increase.

Commenting on this milestone, Saudi Payments Managing Director, Abdulaziz Al Afaleq said “NFC Payments in Saudi Arabia has become the dominant method of payment in the retail sector.

And it is quite remarkable how rapidly the local community embraced the technology, considering that it was only introduced around five years ago.

In part, this is attributed to the demographic make-up of the Saudi community, where more than two thirds of the population are young citizens who tend to be more flexible in adapting to new changes and innovations. Another contributing factor is the pandemic which further drove preference of contactless payments.

However, the major factor at play in the exponential rise in NFC adoption is the accelerated evolution in the digital finance sector, which Saudi Payments is striving to achieve in line with the strategies of the Saudi Central Bank (SAMA) to foster innovation in the sector as a way to progress toward a digital economy.

This digital ecosystem supports the latest technologies and encourages consumers to make the shift as it provides them with the latest payment solutions aligned with the best global standards of security.

This amazing development will certainly help us further contribute to achieving the goals of Saudi Vision 2030’s Financial Sector Development Program (FSDP), which aims to grow payments digitalization to 70% of all transactions by 2025.”

The Saudi Central Bank has deployed the relevant infrastructure supporting NFC payments, through close collaboration with Saudi Payments and the different players in the payments’ ecosystem.

The process featured infrastructure upgrades that included replacing all bankcards and point-of-sale terminals with NFC compatible devices. Saudi Arabia had more than one million POS terminals supporting the NFC feature as of 2021.
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