Adopting digital payments could bring up to SR 25.1 billion annually in net benefit to consumers

Visa (NYSE:V), the world leader in digital payments, has revealed the results of an independent study, conducted by Roubini ThoughtLab and commissioned by Visa, examining the economic impact of increasing the use of digital payments in major cities around the world. The study shows that increased usage of digital payments, such as cards and mobile payments, could yield a net benefit of up to SR 25.12 billion annually to consumers, businesses, and government in Riyadh.

The Riyadh findings of the global study were revealed in support of Saudi Vision 2030, which was launched by His Highness Mohammad bin Salman bin Abdulaziz Al Saud, Crown Prince of Saudi Arabia, First Deputy Prime Minister, President of the Council for Economic and Development Affairs and Minister of Defense, to promote the economic transformation strategy of the government, and support the long-term diversification objective of the initiative.

The study examines the economic impact of the use of digital payments in several global cities including Riyadh. By reducing reliance on cash, the study estimates the immediate and long-term benefits for three main groups in Riyadh:

• Consumers, who could save nearly SR 1.1 billion, from both time savings while conducting banking, retail and transit transactions, as well as a reduction in cash-related fraud;
• Businesses, which could achieve up to SR 13.9 billion from time savings while processing incoming and outgoing payments, and increased sales revenues stemming from extended online and in-store customer bases; and
• Governments, which could save nearly SR 10.1 billion from factors including increased economic growth, and cost savings from administrative efficiencies.

The results announced are part of the global Visa report, “Cashless Cities: Realizing the Benefits of Digital Payments”, a unique study that quantifies the potential net benefits experienced by 100 cities across the globe, as they seek to significantly increase the use of digital payments over physical money. The study does not look at eliminating cash; rather, it examines the benefits experienced when a city moves to an “achievable level of cashlessness” - defined as the entire population of a city moving to digital payment usage equivalent to the top 10% of its users today.

Attending today’s session, Ziad Al Yousef, General Manager of National Payments System – mada and SADAD at the Saudi Arabian Monetary Authority, said: “Today’s discussion is an important one in the context of Vision 2030 and the government’s ambitious plans in moving the Kingdom towards cashless payments. Digital payments enable the modernization and transparency of financial services, and are key to catalyzing economic diversification. We look forward to our continued partnership with Visa in achieving these goals, particularly as we take significant steps in opening up Saudi’s eCommerce market, allowing consumers to pay online with their mada cards. We realize that steps like these are only possible, thanks to the level of security and guarantee offered through the online shopping service of mada and strategic partnerships that companies like Visa bring to online card payments, and we commend Visa for their initiatives in both growing the digital payments sector and raising awareness on the benefits that cashless payments bring. We are looking forward at mada to benefit from the results of this study and comparing it to the previous similar studies conducted by SAMA.”

Commenting on the results, Ahmed Gaber, Visa’s Group Country Manager, KSA, Bahrain, Kuwait and Oman, said: “As the Kingdom of Saudi Arabia pushes forward with its modernization initiatives, digital payments offer an immense untapped opportunity to boost economic growth in the Kingdom. We particularly welcome enabling eCommerce payments with mada cards, which we are certain will provide a strong impetus to the country’s booming online shopping sector, and I look forward to building on our work with partners like SAMA and mada to drive the adoption of cashless payments in the country.”

“Our Cashless Cities study results indicate an astounding figure of SR 25.12 billion worth of net benefits that going cashless would bring to Riyadh annually, and its implications to the rest of the country are even more significant. As the leading digital payments institution within KSA, Visa stands well positioned to work with the government, banks and merchants alike in unlocking the financial benefits of moving towards digital payments,” added Gaber.

The study also estimated substantial benefits on Riyadh’s economic drivers over the next 15 years with results indicating that by 2032, cashless payments could increase employment by 1.2% and increase GDP growth rates by 11.6 basis points.  

“Cashless Cities: Realizing the Benefits of Digital Payments” offers over 60 recommendations for all ecosystem participants, including decision makers, to help their cities become more efficient through greater adoption of digital payments. These include undertaking financial literacy programs to help move the unbanked into the banking system, implementing incentives to stimulate innovation focused on scaling new payment technologies.

“Saudi Arabia Vision 2030 clearly outlines the Kingdom’s roadmap to drive economic diversification, and create new sectors and jobs. Our study quantifies the potential that a cashless transformation would bring to Riyadh, and we continue to innovate and work as a strategic partner of Saudi Arabia Monetary Agency to help realize these objectives, for a sustainable and accelerated growth in the years ahead,” added Majeed Hujair, Senior Director, School of Public Policy for Central and Eastern Europe, Middle East and Africa (CEMEA), Visa.