A new dawn in Middle East payments

The Middle East as a region has a population of more than 190 million people and a combined GDP of over $1.6 trillion. Its aggregate economy is larger than Russia or Brazil and has impressive growth prospects. In the main, the region has a developing yet fragmented payments ecosystem, with high cash and cheque volumes coupled with rapid growth in card transactions. Culturally the Middle East has a strong reputation for innovation, particularly with closed loop payments services and has a high penetration of smartphones.

The payments landscape of the Middle East is characterised by a number of factors; high smartphone adoption – indeed mobile phone accounts greatly outnumber bank accounts – and a large unbanked and under banked population. GCC (Gulf cooperation council) revenues within the Banking industry are dominated by card payments and acquiring, accounting for over 37% of overall payments revenue. Over 90% of transactions are made in cash and the majority of non-cash payments are made by cheque; electronic credit transfers contribute less than half of what they do in Europe. Prepaid cards are also prevalent, owing to salary disbursements for migrant workers.

Although most countries in the region rely on an RTGS system for all payments transfers, there is growing momentum for a new payments infrastructure to handle low value payments to improve availability and enable a better fit for emerging online and mobile channels. The introduction of SADAD, the national Electronic Bill Presentment and Payment (EBPP) service provider for the Kingdom of Saudi Arabia, which utilises the country’s real-time settlement platform with end of day settlement, has shown a real desire to adopt electronic payment transfers.

While many governments around the world have struggled to keep up with the digital age, this is not the case in the Middle East. Across the region, e-government has taken off in a big way in recent years, with successful initiatives in the UAE, The Kingdom of Saudi Arabia, Qatar, Oman, Kuwait and Bahrain. The UAE recently witnessed the highest jump in the world e-government development ranking from No.49 in 2010 to No. 28 in 2012. Dubai’s ‘Smart Government’ is one of the country’s many e-government success stories, having earned a United Nations Public Service Award in 2013.

With the generic use of ID cards, opportunities also exist to establish whether an ID card number could also be used as a proxy to help initiate payments at merchant and consumer level.

The Middle East as a region presents a great opportunity for the deployment of real-time payment services. Banks in the region can generate new revenues from payment services, while governments and central banks can realise greater efficiencies and reduced processing costs whilst accelerating the move away from cash and cheques. The Middle East is well positioned to make investments and see visible returns in an accelerated timeframe.

Cash's share of total transactions in 2008

The vast majority of payments within the GCC (Gulf cooperation council) are still cash

Cash payments within the Middle East

The Middle East in focus

Saudi Arabia

Current market background

The Saudi Arabian Riyal Interbank Express (SARIE) system commenced live operation in May 1997. It provides the mechanism for those banks to safely and efficiently exchange funds transfer and direct debit messages on behalf of their customers as well as for their own trading purposes.

The SARIE system, designed on the concept of RTGS, provides the back-bone for a number of payment services. These include ACH services (CTs, DDs), an electronic cheque clearing system; the Saudi Payments Network (SPAN), which links all ATM and EFTPOS terminals, the Electronic Securities System (TADAWUL); and also the electronic Bill Presentment & Payment (EBPP- SADAD).

The system does not operate on Fridays. The system uses the outdated SWIFT MT103 format (superseded by MT103+ , ISO20022 is a superior and modern messaging standard – richer data). SARIE is a fully integrated RTGS system that permits all banks within Saudi Arabia to make immediate interbank money transfers through accounts held at SAMA. The system has 24-hour availability and ensures payment finality and irrevocability.

Organisations that provide networks/systems which utilise SARIE

The Saudi Payments Network (SPAN) is the National ATM and Points of Sale network connecting all Saudi banks and providing a common service point to the Kingdom. In 1990, SPAN became operational.

SADAD Payment System (SADAD) was established by the Saudi Arabian Monetary Agency (SAMA) to be the national Electronic Bill Presentment and Payment (EBPP) service provider for the Kingdom of Saudi Arabia (KSA).

Market challenges

Legacy technology - prohibits the use of richer data to be transferred across the system; it may also inhibit frictionless mobile and online payment services via ACH.

An RTGS system – using an RTGS system for lower value payments introduces greater risk into the system, especially as volumes begin to grow.


The core mandate for SADAD is to facilitate and streamline bill payment transactions of end consumers through all channels of the Kingdom’s Banks. SAMA worked to rationalize all these connections through SADAD, which is a single platform that links different billers and banks to enable the consumers to use banks electronic channels.

SADAD is now facilitating the payment of; high volume periodic/repetitive bills (e.g. utility bills, phone bills etc.), and customer initiated payments, such as traffic fines. Settlement occurs at the end of the day.

United Arab Emirates

Current market background

The UAE Funds Transfer System (UAEFTS) is the RTGS of the United Arab Emirates, hosted by the Central Bank of the UAE. The system has been operational since August 25, 2001. The latest edition, UAEFTS 3.0, has been functioning since March 2012 (providing greater functionality). The system facilitates the transfer of funds between banks and other financial institutions in the UAE via their accounts held with the Central Bank.

The new fund transfer system is applicable to all types of domestic fund transfers such as salary payments, bank remittances, credit card payments and charitable contributions. The UAEFTS settles transactions in real-time and with immediate finality and the system operates from 08:00 to 14:00 GST (Gulf Standard Time), Saturday to Thursday. Processing and final settlement of transfer instructions take place continuously, in real-time.

Mobile Wallet initiative

The UAE Banks Federation presented this key project, which forms a major component of the financial initiative of Smart Government announced by the UAE Vice President and Prime Minister and Ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum in May 2013.

The project will provide mobile users with the electronic equivalent of a traditional wallet, which is able to store, transfer money and pay for goods and services conveniently on a common platform.

The Smart Government Initiative seeks to ensure that all key public services will be delivered via mobile phones. Smart Government in the UAE is an advanced electronic control step, which aims to encourage the government and state-owned companies to provide highly efficient and transparent services through mobile phone applications that meet customer expectations.

Banks involved in the UAE Banks Federation Committee include Abu Dhabi Islamic Bank (ADIB), Emirates National Bank of Dubai, First Gulf Bank, National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, Commercial Bank of Dubai, Standard Chartered Bank, Mashreq, and Dubai Islamic Bank.


Current market background

The Central Bank of Bahrain operates a RTGS system where all inter-bank payments are processed and settled in real-time on-line mode. The RTGS system provides payment and settlement of customer transactions and enables the banks to have real-time information on, for example, account balances, used and available intra-day credit, queue status and transaction statuses. The RTGS system has a multi-currency capable and is based on Straight Through Processing. It’s open from 08:00 to 13:40 GST every business day and at the end of each business day, the RTGS system will transfer any remaining balances from the banks RTGS accounts to the banks clearing accounts.