KSA Payments Market Outlook to 2030

KSA Payments Market Overview

• The KSA payments market, valued at USD 163 million based on a five-year historical analysis, is driven by several key factors. The increasing adoption of digital payment solutions, driven by the governments Vision 2030 initiative and its goal to create a cashless economy, has been instrumental in market growth. With initiatives such as the introduction of the Saudi Payments Network (Mada), cashless transactions have surged, particularly in sectors such as e-commerce, retail, and government services.
• The dominance of cities like Riyadh and Jeddah in the market is primarily attributed to their higher economic activities, advanced infrastructure, and greater technological adoption. Riyadh, being the capital, serves as a hub for major financial institutions, governmental bodies, and large businesses, making it a focal point for payment transactions.
• The Zakat, Tax, and Customs Authority (ZATCA) implemented mandatory e-invoicing regulations in 2021 to combat tax evasion and enhance transparency in business transactions. By 2024, the initiative is fully operational, requiring businesses to issue electronic invoices for all transactions, which also strengthens digital payment adoption. This policy has led to a sharp increase in the number of companies transitioning to digital payment systems to ensure compliance.

KSA Payments Market Segmentation

By Payment Mode: The market is segmented by payment mode into mobile payments, credit & debit cards, bank transfers, cash, and other digital payments. Recently, mobile payments have gained a dominant market share in the Kingdom, primarily due to the widespread use of smartphones and the introduction of apps like STC Pay and Apple Pay. These services have allowed consumers to make seamless transactions, including bill payments, money transfers, and retail purchases, without relying on cash or physical cards.

By End User: The market is also segmented by end user into retail, healthcare, education, transportation, and government. the retail sector is the largest contributor to the market due to the significant shift towards online shopping and digital payments. The growing popularity of e-commerce platforms such as Noon and Amazon KSA, coupled with the increasing use of mobile wallets and contactless payment options in physical stores, has resulted in the retail segment being the top end-user for digital transactions.

KSA Payments Market Competitive Landscape

The market is dominated by a combination of local and international players, including payment platforms, banks, and fintech companies. Companies like STC Pay, Mada, and Al Rajhi Bank lead the market, benefitting from strong government backing and well-established financial infrastructures.

KSA Payments Market Analysis

Market Growth Drivers

• Governments Vision 2030: Saudi Arabia's Vision 2030 aims to diversify the economy and reduce dependency on oil, with the digital payments sector playing a critical role. The plan has attracted investments in infrastructure, tech, and digital services as of 2024. Financial inclusion is a key focus, with the government mandating the adoption of cashless payments in sectors such as retail and hospitality. This vision is encouraging faster digitalization, spurring a rise in the number of mobile payment users and digital transactions nationwide.
• Growing E-commerce Sector: E-commerce in Saudi Arabia has witnessed a boom, with the market generating revenue in 2024, driven by increased internet and smartphone penetration. With digital payment methods being essential for online shopping, this sector is propelling growth in the payments market. Major players like Amazon and Noon have increased their presence, while local e-commerce businesses are rapidly expanding, supported by an increasing preference for cashless transactions among the growing population of tech-savvy consumers.
• Rising Financial Inclusion Initiatives: Saudi Arabia has been actively working to increase financial inclusion by enhancing access to banking services and digital payments. As of 2024, over 90% of the adult population has a bank account, according to the Saudi Central Bank (SAMA). Programs such as the Financial Sector Development Program are aimed at promoting the usage of electronic payments and reducing cash reliance, especially in rural areas. These efforts have been instrumental in accelerating the adoption of digital wallets and mobile payment systems.

Market Challenges

• Cybersecurity Concerns: In 2023, KSA recorded over 3,200 cyberattacks targeting the financial sector. The increasing reliance on digital payments has heightened the risk of cyber threats, fraud, and data breaches. Maintaining secure networks and data protection systems requires significant investment in cybersecurity technologies, which not all companies, particularly SMEs, can afford. This risk hampers the widespread adoption of digital payment systems, with customers hesitant to trust online platforms without adequate security.
• Inadequate Digital Literacy in Rural Areas: Despite efforts to expand digital payments into rural areas, a portion of the rural population remains digitally illiterate. As of 2024, less than 60% of rural inhabitants regularly use mobile phones for financial transactions. This is due to a lack of understanding of how digital payments work, combined with a preference for traditional banking or cash methods. The challenge of educating and building trust among this demographic remains a barrier to full digital payment adoption.

KSA Payments Market Future Outlook

Over the next few years, the KSA payments industry is expected to show growth driven by continuous government support for digital transformation, advancements in payment technologies such as blockchain and AI, and increasing consumer demand for contactless and mobile payments. Furthermore, with Vision 2030 emphasizing the reduction of cash-based transactions and fostering financial inclusion, the payments ecosystem is set to evolve rapidly.

Future Market Opportunities

• Expansion of Open Banking: Over the next five years, Saudi Arabia is expected to fully implement open banking, allowing consumers to securely share their financial data with third-party service providers. This will lead to the development of personalized payment services, including AI-driven budgeting tools and real-time transaction monitoring. Open banking will foster competition among payment providers, resulting in more cost-effective and innovative solutions for consumers.
• Rise of Contactless Payments: By 2028, contactless payments, which already saw growth during the pandemic, will dominate the market, especially in urban areas. The number of contactless transactions is expected to increase as consumers prioritize hygiene and convenience. Major retailers, public transportation services, and government entities are projected to fully transition to contactless payment methods, reducing the need for physical cash and cards.