The Kingdom of Saudi Arabia has become the second-largest economy in the Middle East and North Africa (MENA) region after achieving a GDP of $1.083 trillion in 2024, a 3.3% increase from the previous year. With Vision 2030, the Kingdom is following a transformational roadmap, decoupling the economy from oil and toward a sustainable future. In 2024, electronic payments accounted for 79% of all retail transactions, surpassing the Vision 2030 target of 70% well ahead of schedule.
The Financial Sector Development Program (FSDP) has systematically removed friction from digital transactions with clear results: The number of non-cash retail transactions surged to 12.6 billion in 2024, up from 10.8 billion the previous year. This shift to a cashless economy is now an operational reality for merchants as cash handling becomes an unnecessary operational cost, while digital acceptance is the primary driver of revenue.
Recent Innovations and Regulations Shaping the Landscape
Under Vision 2030, the regulator (SAMA) and tax authority (ZATCA) have created a unified ecosystem where regulation drives innovation in the region. This environment creates specific obligations and opportunities for merchants.
SAMA’s Strategic Fee Caps (2025 Reforms)
SAMA has aggressively regulated fees to lower merchant costs and encourage digital adoption.
- Mada (Debit) Caps: Acquiring banks are limited to a Merchant Service Charge (MSC) of 0.80%, typically capped at SAR 40 per transaction.
- Credit Card Reforms: Effective 2025, international transaction fees are capped at 2%. Crucially, e-wallet top-ups via credit cards are now free, boosting consumer liquidity in digital wallets.
These caps protect merchant margins, making Saudi Arabia one of the most cost-efficient markets for accepting digital payments globally.
ZATCA Phase 2: The Integration Mandate
Merchants must integrate POS and ERP systems with ZATCA’s "Fatoora" portal to generate real-time XML invoices with cryptographic stamps. Implementation is rolling out in waves based on revenue with heavy penalties for non-compliance.
SoftPOS & Open Banking
Providers like Geidea have democratized acceptance, allowing merchants to use Android smartphones as payment terminals. This "Tap-to-Phone" tech has driven POS terminal counts over 1 million.
Launched under SAMA’s framework, Open Banking (Pay by Bank) allows merchants to pull funds directly from customer bank accounts. It bypasses card networks entirely, offering instant settlement via the Sarie rail and significantly lower fees than credit cards.
Key Players in the Landscape
The Regulator
The SAMA (Saudi Central Bank) is the primary payments regulator in the region, implementing policies for Fintechs, Open Banking, and Digital Banking.
The Infrastructure
Saudi Payments, a subsidiary of the SAMA, provides the national payment infrastructure. They manage:
- mada: The national domestic payment scheme (debit cards and NFC).
- SADAD: The central electronic bill payment system.
- sarie: The instant payment system for immediate bank-to-bank transfers.
Payment Gateways and Merchant Services
- Gidea: The dominant provider of physical POS terminals with a 75% market share in the payment acceptance space. Also offers softPOS services for SMEs in the region.
- PayTabs: Offers secure, omni-channel payment solutions, particularly for merchants in the MENA region.
- HyperPay: Allows e-commerce businesses to integrate mada, Visa, and Mastercard into their websites, handling the complex backend of transaction security and processing.
- Moyasar: SAMA-licenses payment gateway, known for its easy API integration and supporting all popular local payment methods.
E-commerce Enablers
- Salla: Offers built-in payment gateways and shipping integrations without requiring custom code. It is optimized for local markets with "Salla Pay", a native payment solution that aggregates methods like Apple Pay and Mada, simplifying reconciliation for SMEs.
- Zid: Known for robust inventory management and ERP integrations, advanced analytics, and integrated services like Zid Ship and Zid Pay.
Banks and Digital Wallets:
- Al Rajhi Bank: One of the largest banks in the region, commanding the largest merchant acquiring market share (~41% of POS terminals). Provides the best commercial rates for mada transactions. The bank’s digital wallet, urpay, is a major competitor offering digital banking services, international transfers, and cashback rewards.
- STC Bank (formerly STC Pay): A fully licensed digital bank, dominates P2P transfers, international remittances, and QR-based retail payments. Their "STC Pay Merchant" app allows small businesses to accept payments via QR code with zero hardware investment.
- SNB (Saudi National Bank): A key player in the Sarie instant payment ecosystem, with its Quick Pay service for local transfers, as well as e-commerce and Soft POS solutions that accept Mada, Apple Pay, and Google Pay.
Popular Payment Methods
Mada (National Debit Scheme)
Accounts for over 93% of card payments in the region. It links all bank-issued debit cards to a single national network, usable for in-store POS, online shopping, and ATMs. Merchants benefit from the lowest transaction fees in the Kingdom and access to over 30 million cardholders.
Digital Wallets (Apple Pay / STC Pay)
Apple Pay is the most preferred payment method (36%) for online retail payments. Whereas STC Pay is most popular among a younger demographic with a 12% market share.
Instant Payments (Sarie)
Sarie offers merchants immediate 24/7 liquidity through real-time settlements, with nominal fees, making it the preferred method for B2B transactions.
Buy Now, Pay Later
Merchants often see a 30% to 50% increase in average order value (AOV) as customers feel empowered to buy more expensive items through interest-free installments [Tamara].
Upcoming Trends
The Rise of "Pay-by-Bank" (Open Banking)
With SAMA’s Open Banking framework now fully operational, merchants are moving away from traditional card networks (and their associated 1.5%–3% fees). With customers paying directly from their bank app to business accounts, merchants get instant settlements instead of waiting for card processes to clear funds.
SoftPOS
In the region, merchants can use their smartphones as a secure, mada-certified payment terminal, eliminating the need to rent or buy traditional POS devices. This approach facilitates scaling checkouts during peak seasons and avoids hardware maintenance costs.
Hyper-Localization for Global Tourists
As Saudi Arabia targets 150 million annual visitors by 2030, the payment rails have integrated global wallets to capture tourist payments without friction. This allows automated currency conversion and high conversion rates from tourists.
B2B Payments Automation
The "Fatoora" (E-invoicing) mandate by ZATCA has converged with the sarie instant payment rail to automate the back office. For merchants, this helps eliminate manual reconciliation errors and significantly reduces the Days Sales Outstanding (DSO).
Future Outlook
Saudi Arabia’s payments landscape is moving toward a near-total digital future. The government’s revised 80% non-cash milestone and a projected market value of USD 327 billion by 2031 signal a total digital paradigm. With Open Finance and Payment Initiation Services (PIS), merchants will be able to move away from card network fees, while the mandate to host 525 fintechs by 2030 will continue to lower transaction costs and provide specialized industry tools. As BNPL evolves into high-ticket sectors like healthcare and education, service providers can unlock previously restricted sales tiers.
However, growth brings complexity. Merchants must align with national cybersecurity standards as the region scales fraud-prevention spending to USD 2.4 billion to counter rising phishing risks. Additionally, bridging the city-rural digital gap remains a priority; merchants expanding nationally must provide localized education and offline-capable POS systems for regions where digital usage still lags below 60%.
