Priyan Attygalle, CEO, American Express Saudi Arabia • Interview
COVID-19 has hurt the credit card industry in the short term but accelerated the move away from cash, and American Express Saudi Arabia is now focused on incentives for customers and expanding its client base.
The payments industry has seen a unique set of impacts from the pandemic. How have you reacted?
The payments industry never sleeps. To provide service 24/7, you need to make sure your staff can work remotely from wherever they are located. American Express Saudi Arabia had the legacy infrastructure for remote access and we were able to extend this facility to all staff from the start of the pandemic. Our strategy for COVID-19 was designed around four stages—lockdown, transition, recovery, and the growth stage. For the lockdown stage, we looked at the payment services customers needed during a total lockdown. They would be ordering essentials online and driving to neighboring grocery stores and pharmacies. Traditional cash users started moving to cards and other electronic payment methods. Contactless payments started to become important for the customer. The central bank reacted fast and increased the contactless limit from SAR100 to SAR300 per transaction, so people did not have to touch payment machines when entering their PINs to make small payments. Subsequently, the first behavioral shift of paying for even a small item with a credit card or phone started. The second was the increased use of credit cards for local transactions in Saudi Arabia. Previously, many only used credit cards when they were overseas and still used cash or debit cards at home. Third, we noticed our ATM usage falling because people were using less cash and more electronic/card payment methods. All card and electronic payments saw a massive growth in transaction numbers locally. During the transition phase, consumers were buying home entertainment units such as televisions, sound systems and work from home essentials such as computers, large monitors etc. Home and garden improvement products became popular. In the recovery stage people started to travel locally. This saw people who never considered a local holiday before going on staycations. Local tourism became more popular, for example going fishing and diving in Jeddah. That is the phase we are in now—people are changing their lifestyles. The next stage is when people can travel internationally, though that is some time away once a vaccine is found.
What has happened to American Express Saudi Arabia's revenue in this period?
Our revenues have suffered like most companies who depend on travel and consumer spend. A large part of our revenue stream comes from international travel and corporate travel. Thus, while we have suffered from a revenue perspective as a result of COVID-19, we have been able to re-invent ourselves as an everyday card for local spending in the Kingdom. We have made our platform more efficient and automated a large part of our processing. Overall, COVID-19 has hurt the credit card industry in the short term but accelerated the move away from cash, an exercise that would have required a substantial marketing investment and time. In our transition to being an everyday card, we have increased our acceptance rate threefold. Our aim is to be close to parity in terms of merchant acceptance with other card schemes in Saudi Arabia. We are also incentivizing customers who use their American Express card at selected supermarkets and online merchants so that their everyday spend is captured.
What do you see for American Express' business in Saudi Arabia for the next year as the situation evolves?
The worst is behind us, and we expect to see a gradual recovery. During the recovery, we will ensure that American Express' platforms are robust to support our digital offering. We need to make sure we have the right partnerships to support the change in our customer behavior trends. As we are a closed loop card system, we are the issuer, network, and acquirer retaining the transaction with us at all times, unlike other card schemes where the transaction is handed over to various other entities. From a safety and security angle, a closed loop network is always a better option for the customer.