Saudi Arabia has experienced a significant 16% increase in credit card loans during the first quarter of 2024, totaling SR27.25 billion ($7.3 billion), according to the latest data from the Saudi Central Bank (SAMA). This growth highlights a shift towards cashless payment methods and underscores the Kingdom’s progress towards becoming a cashless society.

Ravi Sharma, a banking and payments analyst from GlobalData, in an April report, noted the transition from cash to electronic payments in Saudi Arabia. He stated that while cash was traditionally favored, there is a growing preference for electronic payments among consumers.

The statistics from GlobalData show that the value of card payments in Saudi Arabia grew by 17.8% in 2022, and by 9.7% in 2023, reaching SR511.5 billion. Sharma commented on the robust digital payment infrastructure in Saudi Arabia, mentioning the government’s efforts to enhance this by encouraging merchants to adopt electronic payment options.

The surge in credit card loans is also linked to recent partnerships aimed at introducing new credit card offerings and payment solutions across the Kingdom. For instance, Mastercard has collaborated with digital payments technology company Loop to issue Bank Identification Numbers (BINs) for credit cards, enhancing transaction speed and security.

These initiatives are expected to promote seamless and secure digital payments, supporting digitization in everyday transactions and benefiting consumers, merchants, and fintech companies.

Conversely, SAMA data shows only a slight 1% increase in consumer loans, which totaled approximately SR451 billion in the first three months of the year. Within this category, education loans saw a significant 24% increase to SR8 billion, and travel and tourism loans rose by 19% to SR990 million.

Consumer loans, which are typically used for specific purchases and repaid over a fixed period with interest, often feature lower interest rates than credit card loans, making them a more economical option for significant purchases or long-term financing needs. These loans provide a structured repayment plan, helping borrowers manage their debt effectively.

Credit card loans, on the other hand, offer flexibility with no fixed repayment period, allowing borrowers to repay the amount over time as long as minimum monthly payments are made. They also offer rewards programs, cashback incentives, and other perks, adding extra value for cardholders.