Ali Bailoun, General ManagerSaudi Arabia, Visa • Interview

Contactless payments saw explosive growth over the last year, and Visa believes a return to the old ways is unlikely post COVID-19.

2020 was certainly an interesting year, especially for the payments sector and all kinds of digital products. How have you seen volumes at Visa change since 2020?

Saudi Arabia was making steady progress toward achieving a 70% cashless economy by 2030, as part of the goals for Vision 2030, and the pandemic has accelerated this shift toward digital commerce. As the pandemic began to impact daily life in Saudi Arabia, card payments (both face to face and online) saw double-digit growth while cash withdrawals declined. This trend is set to accelerate, as more consumers and merchants become used to these cashless options. International volumes have been hit, particularly due to travel restrictions, which has affected Saudi residents since April 2020. However, online shopping has increased sharply, and even the acceptance of digital payments has increased massively over all the different merchant sectors. Another trend is contactless payments, wherein nine out of 10 in-store transactions are tap to pay versus less than two out of 10 before the pandemic. Debit has been the biggest growth driver across all portfolios as opposed to credit and prepaid. That is another global trend we have seen in Saudi as more people spend their own money rather than tapping into credit lines. The pandemic has accelerated several years of change in a matter of months.

What have these new trends meant for Visa in Saudi Arabia?

From a volume perspective, today, faceto-face was a big chunk of our business and a main driver because of travel and high-ticket items. We are not seeing that growth of volumes because of travel restrictions; however, domestic spending across all categories has grown massively.

Will this shift be permanent, and is the drop in face-to-face volumes at risk of continuing?

The changes that we have seen definitely are long-lasting. The use of contactless payments was always in the best interest of public health, and we have no reason to believe things will return to the way they were. We see consumers demanding payment options that are more secure and do not necessarily require physical contact, and that was driving the preference for contactless. When it comes to in-person and high-ticket payments, there was definitely a drop. However, the transformation to digital payments created a new behavior in the market that will shift cash to digital in every sector. As part of the expansion, POS payments and financing platforms are each undergoing a huge transformation to make sure digital options are the first choice and digital wallets become the preferred method for consumers to make purchases. Sellers that still use cash on delivery as their primary method will need to quickly implement a contactless system to survive. Across even smaller sellers, the transformation is moving rapidly, and we have seen it across the board.

Did Visa see a huge uptick in business with STC Pay coming on to the market to provide these digital wallet services?

STC Pay, Hala Pay, and digital wallets in general serve a segment that was not served by financial institutions before. Now, there is a shift even from the financial institutions to serve these segments. The customer journey was different. Today, from home one can apply for a card from their phones, and within minutes everything will be on the mobile, and they can start purchasing. Wallets are sometimes serving specific use cases that were not catered to before. That is why the market is transforming quickly. The increase in transactions and volumes was significant, and STC Pay certainly played a part in that. In terms of our financial performance, Visa’s revenue worldwide has not been immune to the pandemic. However, while other industries have struggled with financial decline, we are fortunate to operate in an area where the shift from cash to digital is still high, which helped us remain profitable in our fiscal year and definitely contributed to our global income of USD11 billion.