Introduction: History and Background of Bill Payment in Saudi Arabia SADAD Payment System Overview and Products Offering

Transcription

1 Introduction: This document was prepared to be included with the supporting documents for Saudi Arabian Monetary Agency (SAMA) application for the United Nations Public Service Awards, it covers the following: History and Background of Bill in Saudi Arabia SADAD System Overview and Products Offering SADAD Current State in regard to coverage and number of transactions

2 SADAD Overview SaudiArabian Monetary Agency (SAMA) Application for the United Nations Public Service Awards February, 2008

3 Table of Content History and Background SADAD Products Offering SADAD Today

4 In the 1980s, SAMA mandated banks to accept payments on behalf of billers at no additional cost to customers or billers, and in return Banks recover a small portion of these costs through float income Pre SADAD Bill Network Consumer Electricity Bank A Telecom Bank B Water Bank C Government Bank D Key Issues When this mandate was issued electricity and telecom revenue were largely l a government revenue, however this situation has changed In 2003, approximately 60 70% of bills are paid at bank branches and a significant proportion of bills are paid by people who are not the bank s customers Banks pay pyfor the IT integration costs with billers Banks incur costs for reconciliation and cash handling related to bill payments Banks recover a small portion of these costs through float income, keeping the collected money for 7 30 days Banks are under further pressure to build additional capabilitiesfor supportingbillers When the relationship started between the major billers it was completely manual Banks started to link electronically with billers to reduce the cost of processing the large number of bills manually, and open new electronic payment channels like ATMs and Phone banking to reduce the use of its branches SADAD Overview 4

5 However, The privatization of Saudi Telecom Company, the introduction of mobile telecom services and liberation of the telecom market led to a large increaseinthenumber number ofbillsinsaudi in Arabia CAGR 13.6% Number of Electricityand Telecom Subscribers in Saudi Arabia (in thousands) Comments The privatization of STC and the introduction of the second mobile service provider (Mobily) are the main factors of the high growth rate Mobile subscribers constitute the largest portion of the billing market share with 61% of the total number of subscripted Mobile lines subscribers also has the largest Cumulative Annual Growth Rate (CAGR) of 67% Government services also grew largely because of the growth of traffic, passports and labour related payments (about 30 million transactions a year) 4,172 4,318 4,507 4,661 5,023 5,360 6,051 6,915 7,963 9,554 12,355 14,987 17,362 21,847 Electricity Fixed Lines Mobile Lines Source: Ministry of Water and Electricity, and International Telecommunication Union SADAD Overview 5

6 The payment market in Saudi Arabia is huge with more than 280 million payments occurring every year and the number is growing fast Saudi Market Segments Market Market Size (1) Major Players SADAD Share Growth Telecom STC & Mobily 37% 16.2% Utilities 60.1 SEC, Water, & Marafiq Government 37.2 Passports, Traffic, and Labour 100% 1% 5.6% 6.0% Airlines 9.4 Saudi and Emirates Airlines 0% 5.0% Insurance 6.8 NCCI 9% 47.7% Real estate 6.7 N/A 0% N/A Instalments 3.6 ALJ, NCB, and Jumaih 0% 3.9% Media 2,22 Almajd, Orbit, Obi Showtime, and ART 0% 5.0% Wholesale 2,5 Pepsi, Cock & Dairy Producers Education 0.7 Private schools and colleges 0% 5% 4.1% N/A Manufacturing N/A Saudi Aramco & Sabic 0% N/A Total Market SADAD in market No market share (1) Million Transactions per Annum SADAD Overview 6

7 SAMA mandate led consumers to use bank branches as their primary payment channels (by bank customers and non customers), followed by the billers collection centers and ATMs Bill Channels Top Consumer Issues Concerning Bill Time consuming 100 Delays/Loss in postage Disconnection of service due to delays in bill processing Overlooking payment dates 63 Inconvenient 63 Handling large cash amounts 55 Having to keep track of multiple bills Number of mentions, Time Consuming =100 Source: SADAD Market Research 2002 SADAD Overview 7

8 It was clear that there was a need for a centralize system that acts as an interface between billers and banks, so billers can use the banking channels with low cost SADAD Model Biller A Biller B Biller N SADAD EBPP Model Consumer SADAD Bank A Bank B Bank N SADAD Model Key Attributes SADAD will serve as a visible trusted brand for facilitating electronic payments predominantly high volume and low value SADAD was built on an Electronic Bill Presentment and (EBPP) Model, that acts as a single point of linkage into SADAD for Billers and Banks based on open standards A thin consolidation model will be used SADAD will be an intermediary in the information flow only it will not hold funds on behalf of billers This model will allow more billers to enjoy the wide reach of banking channels in Saudi Arabia All banking channels will be used to collect billers money from customers, and these channels include (ATM, Phone Banking, Online Banking, Bank Branches, and Point of Sale Terminals) SADAD will not own customers directly banks and billers will continue to own and manage customer relationships Customers don t have to register with SADAD in order to use its services, where all banked customers are pre registered, and non bank customers can use SADAD through bank branches and cash acceptance machines A wide range of payment types will be supported via SADAD (e.g. Postpaid and Pre Paid) Streamlined processes for information exchange and payment settlement SADAD Overview 8

9 Table of Content History and Background SADAD Products Offering SADAD Today

10 SADAD currently offer three major product through all banking channels (ATM, Phone Banking, Internet Banking and Branches) SADAD Products Post Paid Pre paid E Vouchers Description Customer enter account or bill number and SADAD present the Customer enter account number and recharge amount Customer don t enter account number and choose from a list of amount SADAD notify Biller about payment and account is settled immediately SADAD notify Biller about payment and account is recharged immediately recharge categories Terminal prints the voucher and customer use just like a scratch card SADAD Channels Automated Teller Machine Phone Banking Internet Banking Banks Branches Customers SADAD Overview 10

11 SADAD will offer billers a wide range of payment channels through thousands of physical and electronic collection channels and outlets through the Saudi Banks (1) that reach every potential customer in Saudi Arabia Geographical Reach Number of Channels Per Bank Province Branch ATM Banks Branch ATM POS (1) Central Province 436 2,147 ANB ,006 Western Province 351 1,757 SAMBA ,455 Eastern Province 230 1,171 NCB 266 1,097 9,430 Northern Province Riyad 200 1,336 6,156 Southern Province SFB ,775 Total 1,351 7,331 Al Rajhi 403 1,715 12,207 Customer Reach Branches and ATMs are located in about 200 different cities and towns around the country Electronic Channels (reaches every household in Saudi Arabia) Online banking Phone Banking 11,010,398 active bank cards that can use SADAD Registration is not required to use SADAD SIB SHB ,824 BAJ Al Bilad Emirates SABB ,784 NBK (1) POS are not yet linked to SADAD Total 1,351 7,331 54,806 SADAD Overview 11

12 SADAD Post Paid Option offers the Biller the option of uploading exact amounts to be viewed and paid by customers Bills Upload Initialisation Acknowledgement Of Transaction Biller Upload Bills Information Receive Notification Credit Account & Approve Transaction End Update SADAD Database Receive & Validate Send Response DATA Send Real time Notification SADAD Post Paid Business Rules 8 Receive Advise & Update SADAD DB Bank 2 Capture User Input & Send to SADAD 5 Receive Response 6a Valid No Present Validation Error to Customer Yes 6b 7 Collect Amount & Confirm End Send Advise Customer 1 Initiate SADAD Overview 12

13 SADAD Prepaid Option Billers the option of uploading customer accounts numbers with its business rules Act. Upload Initialisation Acknowledgement Of Transaction Biller Upload account numbers Receive Notification Credit Account & Approve Transaction End Update SADAD Database Receive & Validate Send Response DATA Send Real time Notification SADAD Pre paid Business Rules 8 Receive Advise & Update SADAD DB Bank 2 Capture User Input & Send to SADAD 5 Receive Response 6a Valid No Present Validation Error to Customer Yes 6b 7 Collect Amount & Confirm End Send Advise Customer 1 Initiate SADAD Overview 13

14 E Vouchers provide billers the option of uploading electronic vouchers with set amounts for their customers to purchase from all the available channels to be used at the biller site Vouchers Upload Initialisation Biller Upload Vouchers 3 4 Receive & Update Validate SADAD SADAD Dtb Database DATA Send Voucher Information Bank 2 5 Collect Amount and Send Advice Provide Voucher Info to Customer End 1 Customer Initiate SADAD Overview 14

15 SADAD also provide its billers other services and support in addition to its major products SADAD Services Service Real time and Batch Notification Daily Reconciliation One Business Day Settlement Reports Description Real time and Batch bill payment notification to Billers Provide to Billers daily reconciliation reports showing a breakdown of all transactions processed by SADAD Settle and collect the money from all the Banks and transfer it to the Biller s Bank account in one business day Provide periodical reports to billers about all the Biller related activities through SADAD 24/7 Help Desk Provide 24/7 help desk dedicated for serving Billers and Banks only SADAD Portal Onboarding Support Provide access to SADAD Portal which have real time data about all the transactions, and provide a mean to communicate between the Biller and SADAD Provide support for integration activities with SADAD system through a dedicated Onboarding team SADAD Overview 15

16 Table of Content History and Background SADAD Products Offering SADAD Today

17 With every month passes SADAD expanded its network by adding more banks and billers, by January 2008 SADAD linked 28 billers and 12 banks, and expected to reach 50 billers and 15 banks by end of SADAD Network Growth Billers and Banks (12 months) Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Banks Billers SADAD Overview 17

18 As of Today, SADAD is linked to 12 banks with most of their channels operational and working with the remaining banks to do so Banks and its Channels Banks Branch ATM Phone Banking Online Banking CAM ANB N/A SAMBA NCB Riyad SFB N/A Al Rajhi BAJ N/A SHB N/A Emirates N/A SABB SIB N/A Al Bilad Testing Phase Not Available SADAD Overview 18

19 SADAD also linked 28 billers so far, and working with 40+ more (government and private) in different integration stages Government Agencies Water Services Riyadh Municipality DZIT Saudi Post Labor Ministry MOCI Traffic Police Passports Customs Home PC Initiative Medina Municipality Jeddah Municipality Eastern Provence Municipality ii Tabouk Municipality Hail Municipality Jouf Municipality Qassim Municipality MOFA King Abdulaziz University Makkah Municipality CITC Jazan Municipality ii Najran Municipality Aseer Municipality Baha Municipality Qiyas Northern Borders Municipality Saudi Telecom Company Marafiq Samba Bravo Telecom Saudi Hollandi Bank Jeddah Chamber NasAir Private Sector Mobily National Commercial Bank American Express Alyusr Installment tcompany Mubasher Stock Market Info Awan Stock Market Info Sahara Net NCCI Sama Airlines Saudi Electricity Company SABB Bank ShowTime Nesma Internet Awal Net Preparation Phase Operational SADAD Overview 19

20 The majority of bills paid in Saudi Arabia are paid through SADAD, which prove SADAD s value to consumers who opt to use it as their main payment method instead of the old way of doing business SADAD Market Share Trends Bill Volume (12 months) 18% 21% 28% 36% 49% 57% 65% 69% 71% 73 % 75 5% 79% 82% 79% 72% 64% 51% 43% 35% 31% 29% 27% 25% 21% Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 SADAD Other Channels Other Channels: Billers owned channels, which include collection centers, distributors, credit cards, checks, cash, etc. SADAD Overview 20

21 SADAD has managed to shift consumers behavior by moving them from physical channels (branches) to electronic channels (ATM, Phone Banking, and Online Banking), branches usage went down from 73% to 12%. SADAD Channels Usage Trends From Beginning to Day 1% 7% 19% 19% 27% Website Phone ATM 73% 42% Branch 12% SADAD Overview 21

22 Currently more consumers are using the internet to query their bills, however most payments are made using Automated Tellers Machines SADAD Channel Usage Trends (Jan 2008) Bill Query Bill 16% 15% 50% 6% 26% 47% ATM Branch Phone Website 28% 12% Bill Query: is the process of consumers querying their bills status Bill : is the process of when consumers actually pay their bills SADAD Overview 22

23 The number of bills paid in SADAD grew steadily in the last 12 months to reach a record 5.3 million bills paid in January 2008 alone, and the number is expected to reach about 8 million monthly payments by end of 2008 SADAD Monthly s Transactions Volume (12 months) (in,000 payments) 5,319 3,171 3, ,037 1,018 1,256 1,586 1,963 2,377 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 SADAD Overview 23

24 The value of bills paid in SADAD also grew steadily in the last 12 months to reach a record SAR 2.3 billion paid in January 2008 alone, and the number is expected to reach about SAR 3.5 billion monthly by end of 2008 SADAD Monthly s Transactions Value (12 months) (in SAR,000,000) 2,324 1,602 1, ,023 1, Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 SADAD Overview 24