According to a new report by Timetric, the rising e-commerce market is forecast to push the growth of Saudi Arabia’s electronic payments industry over the next couple of years.
The study finds that the value of e-commerce transactions grew rapidly in Saudi Arabia during the review period, from US$459.9 million (SAR1.7 billion) in 2010 to US$2.0 billion (SAR7.5 billion) in 2014, and was estimated at US$2.6 billion (SAR9.8 billion) in 2015. By 2019 Timetric expects the country’s e-commerce transactions to more than double, to reach US$5.2 billion (SAR19.5 billion). This rapid expansion will continue to encourage the Saudi population to shift to online payment methods.
The government’s initiatives to develop the e-commerce market will support the growth of electronic payments in the country. For example, the Ministry of Commerce and Industry introduced the first draft of the eCommerce Law in February 2015 to increase the competitiveness in the e-commerce market as well as to enhance customers’ trust in online shopping.
In addition, an increase in purchasing power in the wake of rising disposable income coupled with high mobile penetration, is anticipated to push the online purchasing behaviour of Saudi residents. Many banks – such as Al Rajhi Bank, Riyad Bank, the National Commercial Bank and SABB – have started to offer cards exclusively targeted at online shoppers. These cards are offered as supplementary cards to their primary cards and share the credit limit of the primary card. Moreover, they are embedded with Chip and PIN technology and 3D-Secure features to allow secure online transactions.
As more than half of the Saudi Arabian population is below the age of 30, the technologically advanced young Saudis readily adopt the digital channels. Moreover, with banks launching Sharia-compliant credit cards, the rise in uptake of credit cards is likely to boost the online purchasing behaviour of young Saudis. This trend is anticipated to drive the growth of online transactions further as well as support the expansion of electronic payments in the country.
This information is based on the Timetric report: ‘The Cards and Payments Industry in Saudi Arabia: Emerging Trends and Opportunities to 2019‘.