In 2023, Saudi consumers experienced a monumental shift in their purchasing habits, with a staggering $42 billion spent on ecommerce transactions, marking a significant leap from the previous zero activity recorded until 2018. This surge in online spending, conducted through 874 million transactions, can be attributed to a pivotal decision by the Saudi Central Bank, formerly known as SAMA or the Saudi Arabian Monetary Authority, to enable ecommerce transactions on local debit cards.
At the inception of this initiative in early 2018, Saudi Arabia boasted close to 30 million debit cards, effectively ensuring that virtually every bank account holder in the country had access to online shopping without the necessity of relying on cash-on-delivery methods. The primary objective behind this move was to phase out cash-on-delivery practices in favor of more streamlined online payment methods.
Over the ensuing five years, ecommerce transactions conducted through debit cards in Saudi Arabia skyrocketed, experiencing a remarkable 23-fold increase in transaction count and a 14-fold surge in transaction volume. This success can be attributed to various factors, with two prominent highlights standing out.
Firstly, Saudi Arabia’s demographics played a pivotal role, with over 60 percent of the country’s 32 million population falling under the age of 30 as per the 2022 census. This tech-savvy and financially empowered younger demographic significantly contributed to the rapid adoption of online shopping practices.
Secondly, the introduction and widespread popularity of buy-now-pay-later platforms further democratized online shopping, making it accessible to a broader segment of the population. These platforms provided individuals with greater flexibility in managing their finances while indulging in online purchases.
However, this transformative shift in consumer behavior would not have been possible without an earlier government decision in 2013. The Saudi Labor Ministry introduced the Wage Protection Program to ensure timely and complete payment of salaries to private sector employees. As a result, individuals working in the private sector were mandated to open bank accounts, effectively integrating a significant portion of the country’s unbanked population into the formal banking system.
This bold government decision, made over a decade ago, continues to yield profound ripple effects, catalyzing the evolution of Saudi Arabia’s financial landscape and fostering a burgeoning ecommerce ecosystem.
