Saudi Payments After 85%: The Fight Moves to the Terminal

SAMA data show electronic payments at 85% of retail while POS value per terminal falls 9.4% in a quarter; the constraint is now unit economics.

AsiaPresswire – Saudi Arabia won the argument it spent a decade having. Electronic payments reached 85% of retail transactions in 2025, against a Financial Sector Development Program target of 70% for that year, and against 57% in 2021. The number is now quoted in every fintech deck in Riyadh, usually on slide two.

The number also marks the end of a growth story and the start of a different one. Once four out of five retail transactions are electronic, the remaining 15% is not a market waiting to be converted; it is a residue of small vendors, cash-preferred customers and transactions that are cheaper to settle in notes. Growth from here has to come from somewhere else.

The place it has to come from is visible in the same statistical release, and it is less comfortable than the headline. Saudi POS sales fell from SAR 189.7 billion in the first quarter of 2026 to SAR 179.0 billion in the second, while the number of POS terminals rose from 2.4 million to 2.5 million. Divide one by the other and value per terminal drops 9.4% in a single quarter. That is the number to plan around.

What the 85% actually closed

Start with what the adoption curve was measuring. Between 2021 and 2025 the electronic share of retail transactions went 57%, 62%, 70%, 79%, 85%. Each of those steps was produced by a specific intervention: mandated acceptance for government payments, wage protection rules that pushed payroll into bank accounts, a national QR standard, and the mada debit card as the default instrument.

That work is done. The 15% that remains in 2026 is the hard tail, and it is hard for a reason that has nothing to do with technology. A bakery selling SAR 4 loaves pays a percentage fee on each card transaction, absorbs the settlement delay and keeps a paper trail. Cash costs nothing per transaction and leaves no trail. No amount of terminal subsidy changes that arithmetic until the fee per transaction falls below the value of the anonymity.

So the useful question for 2026 is not how to convert the last 15%. It is what happens to the economics of the 85% now that growth has to come from volume and pricing rather than from new users.

Three variables that now set the ceiling

Three quantities in the SAMA quarterly release determine whether the payments business in Saudi Arabia gets easier or harder over the next eight quarters. None of them is the electronic share.

The first is value per terminal. It measures how much money flows through each acceptance point per quarter, which is the base on which an ad valorem merchant fee is charged. If it falls, every acquirer’s revenue per installed device falls with it unless the rate rises, and the rate is under competitive pressure from new entrants.

The second is cash withdrawn per ATM transaction. It measures whether cash is being used for smaller, more frequent purposes or for larger, less frequent ones. The direction matters more than the level, because it determines refill frequency and therefore the cost per riyal moved.

The third is cards per resident. It measures whether issuance still has room to grow. Once a market has roughly two cards per person, new cards stop adding spend and start adding cost.

Table 1: SAMA payment indicators, first and second quarter of 2026, with unit ratios calculated here

Source: SAMA , Key Economic Developments Q1 and Q2 2026; ratios calculated from the published totals

Divide the totals by the terminals

The first variable is the one that decides whether an acquiring business is worth owning.

In the first quarter of 2026, Saudi Arabia’s 2.98 billion POS transactions carried SAR 189.7 billion of sales across 2.4 million terminals. That is SAR 79,042 per terminal for the quarter, or about SAR 26,300 a month. In the second quarter, 3.15 billion transactions carried SAR 179.0 billion across 2.5 million terminals, or SAR 71,600 per terminal for the quarter.

The transaction count per terminal barely moved: 1,243 in the first quarter, 1,261 in the second, a gain of 1.5%. So this is not a story about terminals sitting idle. It is a story about the average basket getting smaller. Average POS ticket fell from SAR 63.60 to SAR 56.76 between the two quarters, a drop of 10.8%.

Two readings are possible, and they have opposite implications.

Reading one: merchants are pushing small purchases onto cards that used to be cash. A SAR 12 coffee paid by card instead of a note lowers the average ticket while raising volume, which is the intended outcome of the whole national programme. Under this reading, falling ticket size is a success metric.

Reading two: the marginal terminal being installed in 2026 is at a small merchant with low throughput, and the existing base is competing on price. Under this reading, falling ticket size is dilution.

The data cannot separate the two yet. What it can do is tell an operator which way to hedge. If reading one is right, revenue per terminal stabilises as the newly terminalised merchants mature. If reading two is right, revenue per terminal keeps falling and the installed base becomes a cost problem.

The cash side is not dying, it is shrinking in ticket size

The second variable is more interesting than the first because it contradicts the story everyone tells.

Cash withdrawals from ATMs fell 8.3% in value between the first and second quarters of 2026, from SAR 136.8 billion to SAR 125.4 billion. Over the same period the number of ATM transactions rose 11.9%, from 359.0 million to 401.6 million. The average withdrawal fell from SAR 381 to SAR 312, a drop of 18.1%.

More trips to the ATM, for less money each time. That is not the behaviour of a country abandoning cash. It is the behaviour of a country where cash has been demoted to a convenience: the taxi, the tip, the market stall, the school collection. Each of those needs a small amount of notes, and the notes have to be obtained somewhere.

For the banks that run the 14,400 ATMs reported in the second quarter of 2026, this is a cost problem dressed as a volume problem. The cost of keeping an ATM stocked is driven by the number of refill events, not by the value dispensed. If customers withdraw SAR 312 instead of SAR 381, the machine runs dry sooner for the same total value, and the cash-in-transit contract is priced per trip.

There is a straightforward calculation every ATM operator in the Kingdom should have run by now. Take the cost of one refill in 2026, divide by the value dispensed between refills, and you have the cost per SAR 1,000 dispensed. When the average withdrawal falls 18% and the number of withdrawals rises 12%, that cost per SAR 1,000 goes up by roughly a quarter, unless the refill schedule changes.

The third variable is already saturated

Cards issued reached 69.2 million in the second quarter of 2026, up from 66.9 million in the first. Against a resident population of roughly 35 million, that is about two cards per person, which is saturation for a market where most adults hold a mada debit card and a large share hold at least one credit card.

Issuance growth of 3.4% in a quarter is not nothing, but it is now adding cards to people who already have one. The incremental card does not create incremental spend; it fragments the same wallet across more instruments. For issuers, that means the cost of acquisition keeps rising while the revenue per card stays flat.

This is the point where a payments market stops being an adoption story and becomes a share story. Every riyal of growth has to be taken from another institution, another rail or another fee line.

The merchant side of the same arithmetic

A restaurant processing 1,000 card tickets a quarter at the current average of SAR 56.76 turns over SAR 56,760. At an ad valorem fee anywhere between 0.5% and 2%, that is SAR 284 to SAR 1,135 for the quarter, against a terminal rental and connectivity charge that is largely fixed. The smaller the ticket, the larger the share of the fee that fixed costs consume, which is why small merchants remain the strongest constituency for cash in 2026.

Run the same arithmetic against the average ticket of two years earlier and the fixed-cost share falls. The compression between the first and second quarters of 2026 therefore does two things at once: it raises the number of transactions a merchant must process to cover the same fixed cost, and it lowers the revenue each transaction generates for the acquirer. Both parties work harder for the same riyal.

The 371 firms chasing the same terminal

SAMA’s governor put the number of fintech companies operating in the Kingdom at 371 in September 2026, with 307 entities under the open banking framework and more than SAR 30 billion invested in the sector by the end of the first half of 2026. Eight new licences were granted in the second quarter alone, spanning BNPL, payment services, aggregation and open banking.

None of that capacity expands the terminal base much. It divides the same fee pool among more participants, which is how a maturing market transfers value from intermediaries to merchants. The 85% was built by adding acceptance points between 2021 and 2025. The next phase is built by removing intermediaries per transaction.

Where the growth actually went

One more division is worth doing, because it explains why the retail numbers feel flat while the system numbers look strong.

SARIE, the national interbank system, processed SAR 17,777.1 billion in the first quarter of 2026, up 16.1% year on year, and SAR 18,399.2 billion in the second, up 12.7%. Within that, customer payments were SAR 4,496.6 billion in the first quarter and SAR 4,333.7 billion in the second, with year-on-year growth of 8.2% then 2.2%. Interbank payments grew 20.5% then 18.9%.

Read those three lines together. Total value grows at a double-digit rate. Interbank value grows faster. Customer payments, the part that touches households and businesses, decelerated from 8.2% to 2.2% in one quarter.

The wholesale plumbing is where the growth is. That is consistent with a retail market that has finished converting and an economy that is still building: project finance, corporate treasury, government settlements and the capital flows behind the Vision 2030 pipeline all move through the interbank leg, not through a POS terminal.

For anyone whose business model depends on consumer transaction fees, this is the structural message of 2026. The consumer rail is mature, the wholesale rail is expanding, and the two have different customers, different pricing and different competitors.

Who gets hit first

Rank the participants by how quickly a 9.4% fall in value per terminal reaches their income statement.

• Acquirers and terminal deployers are first. Their revenue is a percentage of value processed, so a 9.4% fall in value per device is a 9.4% fall in revenue per device before any pricing response, partly offset by 4.2% more devices.
• Cash-in-transit and ATM operators are second. Their cost is driven by refill frequency, which rises when average withdrawals fall, so their margin compresses even as transaction volumes grow.
• Card issuers are third. Interchange is also ad valorem, but issuers earn on total volume, which is still rising, and they carry less terminal capital.
• Merchants are the beneficiaries, slowly. A market where acquirers are competing for shrinking value per terminal is a market where merchant discount rates have room to fall, and the merchants with enough volume to negotiate are the ones who will capture it.

SAMA’s licensing record points the same way. In the second quarter of 2026 the central bank granted licences to eight companies across BNPL, fintech consumer microfinance, payment services, finance aggregation and open banking. More licensees competing for the same terminal base is a recipe for fee compression, which is good for merchants and bad for anyone who built a model on stable take rates.

Two indicators, and what would prove this wrong

An argument about structure is only useful if it can be falsified. This one rests on two indicators that must be independent of each other, and they are: one measures the merchant side, the other measures the cash side. Neither is derived from the other.

The merchant-side indicator is quarterly POS sales per terminal, currently SAR 71,600. The claim in this piece is that it stays below SAR 78,000 through 2027 as small merchants join and ticket size compresses. The cash-side indicator is cash per ATM transaction, currently SAR 312. The claim is that it stays below SAR 350 over the same period, because cash has been demoted to small-ticket convenience.

Three observations would break the argument, and each is observable in the quarterly release.

First, if POS sales per terminal recovers above SAR 78,000 for two consecutive quarters, the compression was a seasonal artefact of the second quarter, not a structural trend. Second, if cash per ATM transaction climbs back above SAR 380, households are using cash for larger purchases again and the demotion story is wrong. Third, if customer payments through SARIE reaccelerate above 10% year on year while POS value per terminal keeps falling, the retail and wholesale legs are diverging for a reason this framework does not capture, most likely a shift of business spending out of cards and into transfers.

None of these is a small correction. Each one would mean the market is doing something other than maturing.

What to do on Monday

The analysis is only worth the decisions it changes. Three actions follow directly from the numbers above, and all three can be started this week.

• If you operate terminals, calculate your break-even ticket. Take your monthly cost per terminal, divide by your effective ad valorem rate, and you have the sales volume below which the device loses money. With average tickets at SAR 56.76, a meaningful share of your estate is probably below that line, and the fix is a fixed per-transaction floor rather than a higher percentage.
• If you run ATMs or cash logistics, re-price the refill contract against trips, not value. An 18.1% fall in average withdrawal with 11.9% more withdrawals means the trip count is the cost driver, and a contract priced on value dispensed will under-recover.
• If you are a merchant with more than SAR 5 million of annual card volume, ask three acquirers for a quote this month. Value per terminal is falling, eight new licensees were admitted in one quarter, and the pricing power has moved to your side of the table.

The 85% is a genuine achievement and it is also the end of an easy decade. What replaces it is arithmetic: fewer riyals per terminal, more trips to the ATM, and a wholesale rail that is growing faster than anything a consumer sees.

Data basis

Data as of October 2026. All levels come from SAMA’s quarterly Key Economic Developments releases for the first and second quarters of 2026, which report POS transactions and sales, ATM transactions and cash withdrawals, terminal counts, cards issued and SARIE values. The electronic share series of 57%, 62%, 70%, 79% and 85% for 2021 to 2025 is SAMA’s own, restated in the second quarter release. The 2025 electronic transaction count of 14.6 billion, against 12.6 billion in 2024, is also SAMA’s.

Five ratios are calculated from the published figures rather than quoted: POS sales per terminal, average POS ticket, cash per ATM transaction, transactions per terminal and cards per resident. Each divides one published quarterly figure by another from the same release, so the numerator and denominator share a period and a definition. Cards per resident uses an assumed resident population of 35 million, which is an approximation and not a figure from the payments release; a population of 33 million would give 2.1 cards per person and 37 million would give 1.9.

No seasonal adjustment is applied. The comparison is quarter against quarter within a single calendar year, which means it contains both the structural trend and any Ramadan and holiday effects that fall differently in Q1 and Q2.

Limitations

• Two quarters are not a trend. The Q1 to Q2 comparison spans Ramadan timing, which moves retail values independently of structure.
• Cards per resident assumes a population figure that SAMA does not publish in this release.
• Interbank and customer payment splits are reported gross, so they cannot be netted against retail turnover.

Sources

• SAMA , Key Economic Developments Second Quarter 2026
• SAMA , Key Economic Developments First Quarter 2026
• Argaam via Ajel , weekly POS report and the 2021 to 2025 electronic share series, August 2026
• Saudi Gazette via KSA News Today , March 2026 consumer spending, POS and ATM detail, April 2026
• Saudi Online , Money20/20 Middle East, SAMA governor on 85% electronic share and 371 fintechs, 15 September 2026

This article was prepared by the expert team at Global Infinity Labs, drawing on insights and data provided through its MCP data services.

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