RIYADH: Saudi Arabia recorded a 16 percent annual surge in credit card loans in the first quarter of 2024 to reach SR27.25 billion ($7.3 billion), the latest central bank data showed.

The Saudi Central Bank, also known as SAMA, figures indicate a shift in consumer behaviors about cashless payment options and show that the Kingdom is on track to become a cashless society.

In an April report by GlobalData, Ravi Sharma, a banking and payments analyst, emphasized the transition from cash to electronic payments, noting: “While cash has traditionally been a preferred method of payment in Saudi Arabia, its usage is on the decline in line with the rising consumer preference for electronic payments.”

GlobalData’s payment card analytics revealed that card payments value in Saudi Arabia registered a growth of 17.8 percent in 2022, followed by 9.7 percent in 2023 to reach SR511.5 billion.

Commenting on the payments trend in Saudi Arabia, Sharma said: “The country has a robust digital payment infrastructure, supported by a developing card market and a well-established card acceptance infrastructure. The government is taking steps to enhance the infrastructure in the country by encouraging merchants to adopt at least one electronic payment option apart from cash.”

The increase in credit card loans can also be attributed to recent collaborations to introduce new credit card offerings and payment solutions across the Kingdom.

One such collaboration involves Mastercard partnering with a digital payments technology company Loop to issue Bank Identification Numbers for credit cards. A BIN is used to determine the issuing financial institution that a credit card belongs to. They also help in the speedier execution of financial transactions and offer a shield to cardholders from identity theft and fraud.

These innovative payment solutions are expected to facilitate seamless and secure digital payments for consumers, merchants, and fintechs, thereby driving digitization in daily transactions.

This move comes at a time when the Kingdom’s small and medium enterprises and fintech community are thriving, presenting a favorable environment for digital payment solutions.

On the contrary, SAMA data revealed a slight 1 percent uptick in consumer loans, totaling approximately SR451 billion in the three months ending March. Within this category, education loans surged by 24 percent to SR8 billion, while travel and tourism loans saw a 19 percent increase to SR990 million.

Consumer loans typically involve borrowing a specific amount of money, to be repaid over a fixed period with interest. One advantage of consumer loans is that they often come with lower interest rates compared to credit card loans, making them a cost-effective option for large purchases or long-term financing needs. Additionally, consumer loans provide borrowers with a structured repayment plan, allowing them to budget and manage their debt more effectively.

On the other hand, credit card loans do not have a fixed repayment period, and borrowers can repay the borrowed amount over time, as long as they make at least the minimum monthly payments. One of the key advantages is the convenience and flexibility they offer, allowing individuals to make purchases and manage expenses without the need to carry large amounts of cash.

Additionally, they come with rewards programs, cashback incentives, and other perks that can provide additional benefits to cardholders.

CAIRO: Egypt’s annual urban consumer price inflation rate decreased to 32.5 percent in April from 33.3 percent in March, slowing slightly more than analysts had expected, data from the country’s statistics agency CAPMAS showed on Thursday. 

Month-on-month, prices rose by 1.1 percent in April, up from 1.0 percent in March. Food prices declined in April by 0.9 percent, though they were 40.5 percent higher than a year ago.  

A poll of 17 analysts had expected annual inflation to dip to a median 32.8 percent, continuing a slowing trend that started in September when inflation reached a peak of 38.0 percent.  

The central bank has tightened its monetary policy, hiking interest rates by 600 basis on March 6, the same day it signed a $8 billion financial support package with the International Monetary Fund and let the currency plummet.  

Egypt promised the IMF in the March agreement it would resume tightening if necessary to prevent further erosion of the purchasing power of households.  

The government last month also increased the price of a range of petrol, diesel and other fuels, as part of a commitment made to the IMF.  

Inflation has been elevated for the past year, driven largely by rapid growth in the money supply.

Meanwhile, Egypt’s non-oil private sector continued its contraction in April, with the S&P Global Purchasing Managers’ Index for the country edging down to 47.4 from 47.6 in March. This marks the 41st consecutive month below the 50.0 threshold, which separates growth from contraction. 

The employment sub-index slipped to 49.7 in April from 50.8 in March, stated the rating agency. 

However, the output sub-index climbed to 44.8 in April from 44.5 in March and the new orders index improved to 45.5 from 45.0. Business sentiment also improved, with the future output expectations index climbing to 55.3 in April from 52.2 in March. 

Meanwhile, global ratings agency Fitch last week revised Egypt’s outlook to positive from stable. 

The agency affirmed Egypt’s rating at ‘B-,’ citing reduced external financing risks and stronger foreign direct investment. 

Foreign investors have poured billions of dollars into Egyptian treasury bills since the country announced the IMF loan program. After the investment in the country’s foreign portfolio and the support from the UAE, Egypt’s net foreign assets deficit shrank by $17.8 billion in March. 

Fitch said that initial steps to contain off-budget spending should help to reduce public debt sustainability risks.