Cash Is Still King In Saudi Arabia, Despite Fintech Growth

Financial technology players must get creative to win customers in Saudi Arabia.

STC Pay, a digital wallet app launched in October by the biggest Saudi telecommunications company, is something of a cross between Venmo and Apple Pay, allowing people to send money to other users and pay restaurants and stores digitally.

Saudis can also create shared digital wallets for special purposes, such as a feature for their kids or one for domestic workers - including a wallet for the family driver that can only be used at gas stations.

Non-cash transactions accounted for less than a fifth in Saudi Arabia in 2016, meaning the country has some catching up to do just to reach the ratio of 28 percent by next year, one of the goals under Crown Prince Mohammed bin Salman’s economic transformation plan.

The government’s Financial Sector Development Programme, part of the prince’s “Vision 2030,” calls for “additional incentives to foster use of cashless payment solutions.”

“Still we see that cash is king,” Ahmed Alenazi, vice president of business at STC Pay, said at a conference in Riyadh.

Private drivers are popular among wealthy families, and even many middle class Saudi women continue to rely on chauffeurs nearly a year after the kingdom’s ban on female driving was lifted. STC Pay plays on such market quirks partly because convincing Saudis to pay electronically isn’t easy.

Customer needs

“It’s all about tailoring services to the need of the consumer,” said STC Pay strategy manager Abdulrahman Daghache, swiping and tapping on an over-sized screen as he explained the app to visitors at the conference on Sunday.

STC Pay has 200,000 customers so far in a country of more than 30 million people. The company wants to reach people without bank accounts too - Saudi Arabia’s foreign domestic and blue collar workers are often “unbanked” - and recently introduced an international money transfer feature to make it easier to send remittances, Daghache said.

It will compete with other local digital wallet apps such as HalalaH as well as international players like Apple Pay, which launched in the kingdom a few days ago, as they all try to convince Saudis to go cashless.

“From an infrastructure point of view - from central bank capabilities - we have everything we need,” said Mishari Alassailan, a senior adviser at Fintech Saudi. “But what we lack today in our market is the end service, or the consumer engagement.”

In other words, people don’t use it.

Getting Saudis to embrace such apps “will depend on the marketing department, not the technology people,” Alassailan said.