Ali Bailoun, Regional General Manager for KSA, Oman & Bahrain at Visa, Abdulmohsen Albabtain, Co-founder & Head of Payments at Tamara, Remo Giovanni Abbondandolo, General Manager MENA at Checkout.com and Abdulla Almoayed, Founder and CEO of Tarabut discuss with Nisreen Shocair, CEO, Shocase Middle East the evolving dynamics of the payment ecosystem.

Digital Payment Trends and Consumer Behavior

The digital payments sector in Saudi Arabia has seen substantial growth, with a 10% increase in card-present transactions and a threefold increase in e-commerce transactions. Concurrently, cash transactions have declined by around 40%, signifying a move towards a cashless society. The introduction and adoption of local digital payment methods such as STC Pay, and Mada have played a crucial role in this transition, supported by 94% of Saudis shopping online, and 14% engaging in daily online purchases. These statistics underscore the increasing consumer preference for digital platforms, posing both opportunities and challenges for retailers.

The Role of Buy Now, Pay Later (BNPL) in Retail Transactions

BNPL services are rapidly gaining traction, significantly impacting retail transactions by offering flexible payment options. This trend not only facilitates consumer access to goods and services but also supports brick-and-mortar retailers in their digital transition. The adoption rate of BNPL in physical store transactions has catapulted from single digits to high double digits within just two years, reflecting a transformative shift in payment preferences and showcasing the potential of BNPL schemes to democratize consumer credit.

Open Banking: A Gateway to Financial Inclusion and Enhanced Acceptance

Open banking is emerging as a transformative force in the payments landscape, promising greater financial inclusion, and enhanced payment acceptance. By leveraging consumer banking data, open banking initiatives are set to broaden the spectrum of financial services, enabling access for previously underserved segments such as the gig economy. Additionally, the introduction of account-to-account payments through open banking is poised to simplify and secure transactions, offering a seamless payment experience for both consumers and retailers.

Ethical Considerations and Consumer Education in Digital Finance

Amidst the advancements in digital finance, the ethical considerations surrounding consumer debt and the necessity for financial literacy have come into sharp focus. The proliferation of BNPL schemes and easy access to digital credit underscore the need for a balanced approach to consumer finance. Concerns about debt accumulation have prompted discussions on the responsibility of businesses to promote responsible financial behavior. Notably, over 90% of BNPL repayments are made using debit cards, indicating a predominant use of existing funds rather than accruing additional debt, which highlights the complex nature of consumer credit behavior in the digital age.

The future of payments promises a more connected, accessible, and efficient digital economy, with opportunities for growth, innovation, and enhanced consumer experiences. The collaboration among payment technology companies, retailers, and regulatory bodies will be crucial in realizing this vision, ensuring a sustainable and inclusive financial ecosystem.