RIYADH: Saudi banks recorded a significant 21 percent year-on-year increase in credit card loans during the second quarter of 2024, with the total reaching SR30.04 billion ($8.01 billion), according to data released by the Saudi Central Bank (SAMA). This figure represents the highest quarterly increase on record and the most substantial annual growth observed in the past year.
In contrast, consumer loans – typically repaid in installments and used for larger purchases, often at lower fixed interest rates than credit cards – saw a modest 2 percent rise, totaling SR452.32 billion during the same period. SAMA clarified that these figures exclude real estate financing, finance leasing, and margin lending.
A recent report by consultancy firm AlixPartners, titled “Critical Consumer 2024,” highlighted that Saudi Arabia’s preference for digital and credit card payments is on par with Switzerland and even surpasses that of Germany. This trend underscores the growing dominance of payment cards within the Kingdom’s financial ecosystem, driven by government-led initiatives under Vision 2030. These initiatives focus on digital transformation and reducing reliance on cash transactions in favor of electronic payments.
The widespread adoption of contactless transactions, accelerated by the COVID-19 pandemic, has further fueled the growth of card usage in Saudi Arabia. Increased banking penetration, enhanced infrastructure, and greater acceptance of cards by retailers have also contributed to the market’s development.
Under Vision 2030, the Saudi government has been actively promoting fintech innovation and reducing cash dependency, further advancing the payment card market. According to a July report by Global Data, major players in Saudi Arabia’s cards and payments sector include Al Rajhi Bank, Saudi National Bank, SAB, Alinma Bank, and Visa.
In a bid to boost card penetration, banks in Saudi Arabia are now tailoring credit cards to cater to different customer segments. For instance, the Shariah-compliant Titanium Mastercard offers perks such as free VIP lounge access, purchase protection, and installment payment options. Additionally, a Visa Signature credit card targets students enrolled in accredited Saudi universities, providing installment options and reward points through the Akthr Program.
Global Data also noted that recent developments in Saudi Arabia’s cards and payments market include the 2023 launch of pilot digital banking services by two of the three licensed digital banks, STC Bank and D360, as highlighted in the Financial Sector Development Program’s annual report.
The Buy Now Pay Later (BNPL) services, particularly popular among Generation Z consumers, have also gained traction in Saudi Arabia. To regulate this emerging market, the Saudi Central Bank introduced new rules in December 2023. These regulations established licensing requirements for BNPL companies and set minimum standards to ensure consumer protection, sector growth, and sustainability. The guidelines also addressed provisions on licensing, internal regulatory measures, information security, financial crime prevention, and compliance.
BNPL services are expected to contribute to a more dynamic, inclusive, and innovative payment market in Saudi Arabia, supporting both consumer needs and business growth.
Despite global economic uncertainties, consumer spending in Saudi Arabia is projected to remain robust in the coming year. This resilience contrasts with the broader Europe, the Middle East, and Africa (EMEA) region, where 37 percent of consumers plan to reduce spending in 2024, according to the AlixPartners study. Saudi Arabia’s stable spending environment persists amid challenges such as inflation and geopolitical instability, with some sectors still recovering from the pandemic.
The study also revealed that Saudi consumers are increasingly embracing online shopping, with e-commerce gaining popularity. While international companies currently dominate the retail landscape, there is a noticeable shift toward supporting homegrown businesses.
Notably, Saudi Arabia is at the forefront of artificial intelligence (AI) adoption in shopping research. Consumers are showing strong enthusiasm for AI-powered solutions, such as tools for holiday bookings. TechSci Research reported that Saudi Arabia’s AI market in retail and e-commerce was valued at $245 million in 2023 and is expected to experience substantial growth between 2025 and 2029.
As technology reshapes customer experiences, streamlines operations, and improves business decision-making, the retail sector in Saudi Arabia is evolving rapidly. AI-powered chatbots and virtual assistants are becoming more common, offering personalized customer support and enhancing engagement. Additionally, recommendation engines using advanced algorithms analyze consumer preferences to provide customized product suggestions, boosting sales and customer satisfaction. AI is also optimizing supply chain management through predictive analytics and machine learning, reducing costs and ensuring product availability.
