Saudi Arabia Sees 16% Surge in Credit Card Loans, Moves Towards Cashless Society
In a groundbreaking shift, Saudi Arabia has witnessed a remarkable 16 percent increase in credit card loans in the first quarter of 2024, reaching a staggering SR27.25 billion ($7.3 billion) as per the latest data released by the Saudi Central Bank, also known as SAMA.
Consumer Behavior Trends and the Rise of Electronic Payments
The data from SAMA indicates a significant change in consumer behavior towards cashless payment options, signaling a promising trajectory for the Kingdom to become a cashless society. This transformation is underscored by a report from GlobalData in April, where banking and payments analyst Ravi Sharma highlighted the shift from cash to electronic payments in Saudi Arabia.
Robust Growth in Card Payments Value
GlobalData’s payment card analytics revealed a robust growth in card payments value in Saudi Arabia, with a notable increase of 17.8 percent in 2022 and a further 9.7 percent in 2023, reaching SR511.5 billion. Sharma emphasized the country’s strong digital payment infrastructure and the government’s efforts to enhance the electronic payment ecosystem.
Innovative Payment Solutions Driving Digitization
The surge in credit card loans can be attributed to collaborative efforts to introduce new credit card offerings and payment solutions across the Kingdom. Notably, Mastercard’s partnership with digital payments technology company Loop to issue Bank Identification Numbers for credit cards is set to revolutionize financial transactions and enhance security for cardholders.
Thriving SMEs and Fintech Community Boost Digital Payment Solutions
As Saudi Arabia’s small and medium enterprises and fintech community flourish, the environment becomes increasingly favorable for digital payment solutions. These innovative payment solutions are expected to streamline and secure digital payments for consumers, merchants, and fintechs, driving digitization in daily transactions.
Advantages of Consumer Loans vs. Credit Card Loans
Consumer loans, with lower interest rates and structured repayment plans, offer a cost-effective option for large purchases or long-term financing needs. On the other hand, credit card loans provide convenience, flexibility, and additional benefits such as rewards programs and cashback incentives for cardholders.