Saudi Arabia steadily moves toward cashless society
MasterCard has unveiled a new global report “The Cashless Journey” that positions Saudi Arabia among those economies that have begun accelerating their move toward becoming a cashless society.
The report, produced by MasterCard Advisors, explores the evolution of consumer payment patterns in 33 countries from five regions, representing more than 85 percent of global GDP, taking in both developed and developing nations, using a single methodology.
MasterCard Advisors’ research indicates that a country’s readiness to move to a cashless society is determined by factors like the accessibility and affordability of financial services, the scale and market share of retailers, the level of technology that is available, and participation of consumers in the formal economy.
With a readiness score of 57, Saudi Arabia has eliminated many of the typical macro-economic barriers for going cashless. However, low rates of financial inclusion, indicated by the Kingdom’s majority unbanked population, may continue to have an adverse impact on the growth of cashless payments. With a trajectory indicator of 30, Saudi Arabia seems to be moving at a better than average pace on its cashless journey and the key reason for reduced cash share appears to be a substantial share shift from cash to debit cards between 2006 and 2011.
The share indicator score for Saudi Arabia is 19, which puts the market in a category of countries that Advisors refer to as “Inception”, countries that are just starting their cashless journey.
Kevin Stanton, president, MasterCard Advisors, comments: “While each nation’s journey is unique and requires an understanding of local realities, the benefits that come with a more cashless society are universal — more convenience for consumers, better efficiencies for governments, higher productivity for businesses and greater financial inclusion for society as a whole by bringing more citizens into the economic mainstream. This report provides a roadmap for how countries can reap these benefits and enable a better life for all constituents.”
Khalid Hariry, market manager, KSA, Bahrain and Yemen, MasterCard, said: “Saudi Arabia is indeed moving at a better than average pace on its cashless journey, which has been significantly spurred along by government leadership. Regulation mandating wages assignment of employees’ to bank accounts has vastly increased access to electronic payment methods for the Saudi population over a short period of time.
These changes, coming alongside initiatives to spur acceptance, and a push to migrate payments made during the Haj and Umrah pilgrimages, can be expected to shift substantial share of consumer payments away from cash in the coming years.” ArabNews