Saudi’s new e-payment system boosts cashless economy, cuts costs: NCB

Saudi Arabia’s new MADA electronic payment system is helping the kingdom transition into a cashless economy, while reducing costs for businesses, the National Commercial Bank (NCB) said in its economic review for August.

“By providing more efficient ways for banks to compete and undertake their operational activities, technology has increased the speed of business and consumer transactions, which was an element in improving the absorptive capacity of the Saudi economy,” the report said.

MADA was officially launched last week to facilitate financial transactions between banks, merchants, and customers through ATMs and Point of Sale (POS) terminals, according to data available on Argaam.

The system has a wider scope of use than its predecessor, the Saudi Payments Network (SPAN), as well as an increased daily limit for purchases of SAR 60,000.

The kingdom currently uses the Saudi Arabian Riyal Interbank Express System (SARIE), SADAD bill payment system, the banks’ clearing system, Automated Teller Machines (ATMs), and Points of Sale (POS) terminals.

Transactions through SARIE system, introduced in 1997, had increased to SAR 54.5 trillion in 2014 from SAR 8 trillion in 2004. Payment through SADAD, introduced in 2004, grew 9.4 percent annually, reaching SAR 187.3 billion last year.

The overall use of ATMs and POS, used for measuring retail activities and technology penetration in the economy, has also increased, signaling people’s growing comfort level with the technology, as opposed to visiting bank branches.

The value of sales through POS has been posting double digit growth rates since 1996, reaching SAR 169.9 billion in 2014, NCB added. In addition, POS transactions grew by 23 percent year-over-year (y-o-y) in 2014.