What are the different methods of e-payment systems used in e-commerce platforms in Saudi Arabia?

E-commerce in Saudi Arabia has grown significantly in recent years, with more consumers turning to online platforms to make purchases. As a result, various e-payment systems have emerged to facilitate transactions between buyers and sellers. In this article, we will compare the different e-payment methods available in Saudi Arabia and discuss their pros and cons.

What is an e-payment system?

An e-payment system is any method that allows users to make purchases and transfers online, typically through a digital wallet or credit card. Several e-payment systems are available in Saudi Arabia, including bank transfers, digital wallets such as Alipay and Paypal, and cryptocurrencies such as Bitcoin.

How does an e-payment system work?

Most e-payment systems utilize software that facilitates funds transfer between buyers and sellers. This software may be integrated into an online retailer's platform or used as a standalone application, such as with digital wallets. In most cases, payments are processed through a third-party payment processor, which transfers funds from the buyer to the seller after the transaction has been approved.

What are the benefits & drawbacks of e-payment systems in Saudi Arabia?

One of the main advantages of e-payment systems is that they make it easier and more convenient for consumers to shop online. Other benefits include increased security, faster processing times, and lower transaction fees than other payment methods, such as cash and cheques.

The potential for fraud, identity theft, and reliability issues when the payment processor experiences technical problems are two of the primary disadvantages of e-payment systems in Saudi Arabia.

Customers favor recognizable payment methods like credit cards and cash because they are concerned about security and privacy. Additionally, people are often hesitant when purchasing an item online as they fear that the product might not be what was advertised—an issue that e-payment systems can't address. Yes! Customers can pay for a chargeback, but people may need to wait up to 180 days, which can be a problem sometimes.

Despite these drawbacks, e-payment systems continue to play an essential role in the growth of e-commerce in Saudi Arabia as more consumers become comfortable with online purchases. As businesses rely more heavily on digital technologies to stay competitive, the e-payment landscape in Saudi Arabia will likely continue to evolve.

The different methods of e-payment systems used in e-commerce platforms in Saudi Arabia.

There are various e-payment systems available in Saudi Arabia. Here are some of the most commonly used methods:

1. Credit and debit cards: With the highest acceptance rate of any payment system, debit cards are undisputedly the most popular form of transaction in Saudi Arabia. Anyone looking to buy online in Saudi Arabia can have confidence knowing that payment cards made up 34.9% of all e-commerce sales last year - and 88% of those purchases were with a debit card!?(source)
2. Bank transfer: Saudi Arabia has adopted an online payment system that enables users to transfer money between accounts promptly, making it a favorite e-payment choice for citizens of the country. In its first year alone, the IPS achieved over 20 million monthly transactions and boasted an average transaction value (ATV) close to SAR 1,500 per purchase - cementing itself as one of Saudi Arabia's most reliable means of conducting financial transfers almost instantly. (source).?
3. Digital wallets: According to a survey conducted by PayFort in 2016, PayPal was the most preferred e-payment method among online shoppers in Saudi Arabia, followed by credit and debit cards. Alipay is also commonly accepted by e-commerce platforms in Saudi Arabia, particularly those that target Chinese tourists and ex-pats. Overall, e-payment methods, including PayPal and Alipay, are increasing in Saudi Arabia as more and more consumers turn to online platforms for shopping and other transactions.
4. Mobile payment systems: Smartphone penetration in Saudi Arabia reached over 50% in 2020, and mobile payment systems are becoming increasingly popular as e-payment. Services such as Apple Pay and Samsung Pay have been well-received among users; a wide range of e-payment methods are available in Saudi Arabia. However, as consumers become more comfortable with making online purchases and businesses adopt digital technologies to stay competitive, the e-payment landscape in Saudi Arabia will no doubt continue to evolve.
5. E-vouchers and gift cards: One of the newer e-payment methods in Saudi Arabia is using e-vouchers, which can be redeemed online or in person. These are particularly popular among younger consumers and are often used to purchase digital content or social media items such as gift cards or subscription services. Similarly, gift cards have become increasingly common, with many businesses offering this option to their customers.
6. Cryptocurrencies: Some experts have speculated that cryptocurrencies such as Bitcoin may become more widely adopted in Saudi Arabia over the coming years, especially among younger consumers who are comfortable using digital technologies. Despite their current popularity, however, many e-payment systems in Saudi Arabia continue to be dominated by traditional methods such as debit and credit cards—at least for now.

Here are some examples of e-payment systems that are commonly used in e-commerce platforms in Saudi Arabia:

1. Credit and debit cards: Visa, Mastercard, American Express
2. Online banking: SABB Direct, Al Rajhi Bank Online, National Commercial Bank.
3. Digital wallets: Apple Pay, Google Pay.
4. Mobile payment systems: STC Pay, mada.
5. E-vouchers and gift cards: Amazon Gift Cards, iTunes Gift Cards.
6. Cryptocurrencies: Bitcoin, Ethereum, Litecoin.

Most used payment gateways in Saudi Arabia with their Cons & Pros.

It is difficult to determine the most used payment gateways by e-commerce websites in Saudi Arabia, as this information is private. However, here are some payment gateways that are commonly used in Saudi Arabia:

1. Checkout.com: I prefer this one as it has the lowest fees and reliable customer service. It is becoming increasingly popular among e-commerce websites in Saudi Arabia and is a good option for online merchants looking to streamline their payment processing; it is easy to integrate with most e-commerce platforms. For every order made, they charge a fee of 1 Riyal only!
2. Amazon Payment Services: Another popular payment gateway in Saudi Arabia, Amazon Payment Services, is commonly used by major e-commerce platforms such as Souq.com and Noon. It is fast, easy to use, and trusted by many regional customers. Their fee structure is expensive, at least for me; they charge 2.8% + 1 Riyal for each order.
3. Moyasar Payments: It offers low fees and integrated solutions for e-commerce platforms, making it a good option for merchants looking to grow their businesses online. They also provide 24/7 customer support, which can be invaluable if you are experiencing technical issues or need help with your account. Numerous large corporations, including ZiD and Qawafil, benefit from their services. They can easily integrate with Magento, Presta-shop, and Opencart for easier service utilization.
4. PayTabs: PayTabs is a payment gateway that allows e-commerce websites in Saudi Arabia to accept credit and debit card payments and payments through digital wallets such as Apple Pay and Google Pay. It is widely used in the region and offers a secure and convenient way for consumers to pay online. Whether I can use it with Shopify, my favorite e-commerce platform remains a mystery; however, I am seriously considering incorporating it into my next venture.
5. HyberPay: To me, their interface is complex and requires an expert to integrate your website correctly. Additionally, I have heard a few complaints about their refund process, and there may be better pricing options available in the market.
6. SADAD: SADAD is a payment gateway that allows e-commerce websites in Saudi Arabia to accept payments from customers' bank accounts. It is widely used in the region and offers a secure and convenient way for consumers to pay online. To use SADAD to accept payments, you must sign up for an account with the Saudi Arabian Monetary Authority (SAMA). If you're looking for an expert to combine your e-commerce platform with SADAD, the best thing to do is find a payment gateway that has already been integrated. Doing this will save you both time and money!
7. PayPal: PayPal is a global payment gateway widely accepted by e-commerce websites in Saudi Arabia. It allows consumers to make payments using their PayPal account or a credit or debit card. I remember the last time I used their services, there were heftily high fees of 2.9%, not to mention additional currency charges—which makes it quite costly. Furthermore, they are primarily concerned with the USA market.

It is important to note that the availability and popularity of these payment gateways may vary depending on the specific e-commerce platform and the region in Saudi Arabia.

How to choose the right payment system for your business?

There is no single correct answer when choosing a payment system for your e-commerce business in Saudi Arabia, as many factors may impact your decision.

Here is a checklist of some key considerations to keep in mind when choosing a payment gateway for your e-commerce platform:

1. Has the payment gateway been integrated with your primary e-commerce platform and/or other systems, such as accounting or shipping software?
2. How much will it cost to use the payment system (e.g., transaction fees, currency conversion fees, setup and maintenance fees)?
3. How easy is the payment system (e.g., user-friendly interface, clear and transparent pricing information)?
4. Does the payment gateway offer 24/7 customer support if you have any technical problems or need help with your account?
5. Is the payment system widely used and trusted by e-commerce businesses in your region to minimize the risk of fraud or chargebacks?
6. Will the payment system be able to grow and scale with your business as you expand into new markets and/or increase sales volumes?
7. Do you need an expert to help you integrate the payment gateway into your e-commerce platform?

Ultimately, the payment gateway best suited to your e-commerce business will depend on several factors specific to your company and its needs. Do your research, and carefully consider all available options before making a final decision.

Conclusion

Choosing a payment system for your e-commerce business in Saudi Arabia can be complex and challenging. Many factors must be considered, including the costs of using the system, its integration with other systems, and its level of trust and popularity among businesses in your region.

To help make this decision easier, it is essential to do research and consult with experts who can provide guidance and insights on the best payment systems for your specific business needs. With the right approach, you can find a payment system that offers security, reliability, and convenience for your e-commerce customers in Saudi Arabia. Good Luck with your venture!