Following a widespread embrace of financial technologies and related sectors across the country, near-field communication (NFC) payment transactions, or contacless payments, in Saudi Arabia accounted for 95 percent of total POS transactions.
The volume of these transactions reached more than 5.1 billion, valued at over SAR473 billion ($126bn) in 2021.
This marks a 95 percent increase over 2021, according to the latest numbers published by Saudi Arabia’s national payments infrastructure operator, Saudi Payments, as NFC adoption reaches record heights across the kingdom.
“It is quite remarkable how rapidly the local community embraced NFC payments, 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,” said Saudi Payments managing director, Abdulaziz Al Afaleq.
“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,” he continued.
In a 2020 Visa study, Saudi Arabia’s NFC penetration ranked above the European average (80 percent), and higher than Canada (76 percent) and Hong Kong (79 percent). In the MENA region, the kingdom came first in NFC payments adoption, followed by Kuwait (81 percent) and the UAE (81 percent).
This growth in NFC transactions was led by mobile payments which accounted for 35 percent of all transactions in 2021, up from 22 percent in 2020. Moreover, the volume of mobile payments reached more than 1.8 billion transactions with a value of more than SAR128 billion, representing a 182 percent year-on-year increase.
“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,” said Al Afaleq.
“This amazing development will certainly help us further contribute to achieving the goals of Saudi Vision 2030’s Financial Sector Development Programme, which aims to grow payments digitalisation to 70 percent of all transactions by 2025,” he added.
The Saudi Central Bank has deployed the relevant infrastructure supporting NFC payments, through close collaboration with Saudi Payments and the different players in the 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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