Advanced Saudi Payments Network Struggles to Deliver Smooth Mobile Checkouts

It’s an austere landscape of sand, mountains and water. It’s also a cradle of wealth and modern architecture. But that’s not the only striking contrast about Saudi Arabia. On the one hand, the kingdom’s shoppers are the world’s leader when it comes to browsing and buying using a mobile device, usually a smartphone, according to a forthcoming PYMNTS Intelligence report in collaboration with Visa Acceptance. The country is also second only to the United Arab Emirates, and barely so, in mobile retail purchases. Saudi shoppers make two-thirds of their total retail purchases that way.

On the other hand, Saudi mobile shoppers experience disproportionately more headaches when trying to pay for their purchases. The disconnect highlights a vulnerability in the country’s advanced ecosystem for payments.

The Saudi government is on a mission to transform the country’s financial sector and cultivate a cashless society under a broad program called Saudi Vision 2030. The kingdom is already exceeding its objectives, surpassing in 2023 its goal of having 70% of all retail transactions be cashless a year early. Last year, 79% of the total volume of consumer-initiated payments in the country were non-cash, meaning digital — equal to 84% of the value of all consumer transactions, according to a senior Saudi Central Bank official.

The digital fervor is evident in how Saudi Arabian consumers shop for everything from clothing and housewares to food and electronics. But despite the ascent of the mobile-first nation, snags are everywhere. For example, Saudi shoppers are three times more likely than the global average to report that something went wrong when they were checking out — a payment didn’t go through, unexpected charges appeared, the wrong amount was billed, the report reveals.

For nearly three decades, the Saudi Central Bank, known as SAMA, has sought to build from the ground up a payment ecosystem with an “always-on” infrastructure. What the International Monetary Fund said last September was a “rapid state-led transformation toward non-oil growth” centers on a payments infrastructure that is “comprehensive and well-developed,” with a recently reformed legal and regulatory framework governing the country’s central payments system, formerly known as the Saudi Payments Network and since 2015 called Mada. That system supports both domestic debit and international cards scheme and connects all ATMs and point-of-sale (POS) terminals across the country to a central platform that funnels financial transactions between a merchant’s bank and the cardholder’s bank. The changes have extended financial inclusion to almost 94% of the country’s adult population.

In 2021, the country teamed up with IBM and Mastercard to launch the Sarie Instant Payment System enabling individuals and businesses to send and receive money instantly through their banks. Its bill payments system launched less than 10 years ago, Sadad, lets consumers pay electricity and other monthly bills online.

But the mobile-first trajectory is frequently marred by pervasive payment friction and a strikingly high rate of failed transactions.

The report finds that nearly all Saudi Arabian shoppers reported at least one point of friction in their latest online purchase, a figure more than double the global average. More than half of Saudi Arabian shoppers saw their last online transaction declined, a red flag 3.5 times the global average.

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