The World Bank International Advisory Group for Government Payments

1. The World Bank International Advisory Group for Government Payments Technical Meeting – Rome, Italy June 20-21, 2011 SADAD Payment System By Abdulmalik Alsheikh

2. Bill payment in Saudi Arabia has evolve during the last three decades and passed through four stages… Bill Payment Timeline in Saudi Arabia Beginning 1980’s Problem 1990’s Solution 2000’s Reform Today

3. The first stage started in the beginning of the 1980’s when SAMA mandated that all banks should accept bill payment at their branches… Beginning 1980’s Problem 1990’s Solution 2000’s Reform Today

4. The first stage started in the beginning of the 1980’s when SAMA mandated that al banks should accept bill payment at their branches… 1980’s Electricity Telephone Water • SAMA mandated banks to accept bill payments at branches • Utilities' Revenue Was Government Revenue • Customers only have bank branches and utility offices to pay • Limited Number Of Bills • Manual Collection Process Bank Branches Utilities Offices

5. The second stage started when the number of bills paid in Saudi Arabia increased rapidly which caused consumers complaints due to inefficient and time consuming payment process Beginning 1980’s Problem 1990’s Solution 2000’s Reform Today

6. The number of bills has increased with the introduction of mobile telecom services and liberation of the telecom market which led to consumer complaints regarding bill payment... 1990’s Top Consumer Issues Concerning Bill Payment • The number of utility bills has grown from 70M in 2000 to 250M in 2007 • Telecom moved from quarterly billing to monthly or bimonthly • Number of services require regular payments grew from 5 billers to 100+ • Government services grew to about 60 million annual transactions Time consuming 100 Delays/Loss in postage 72 Disconnection of service due to delays in bill processing 67 63 Overlooking payment dates Inconvenient 63 Handling large cash amounts 55 Having to keep track of multiple bills 52 0 20 40 60 80 100 Number of mentions, “Time Consuming” =100

7. In the third stage SAMA introduced SADAD to allow consumers to pay using all the banking channels regardless of the bank and opened the network to every biller… Beginning 1980’s Problem 1990’s Solution 2000’s Reform Today

8. With time banks started to link electronically with utility providers to open new electronic channels to consumers but that only improved little the consumer experience in bill payment.. 2000’s Pre SADAD Bill Payment Network • Manual Collection Process Slowly Shifted To Electronic Process • This direct links models prevented many billers from entering this payment network • Banks resisted any new billers since there is financial no incentive to do so • This model could is not sustainable due to increasing growth in bill payment transactions, high entry barriers and indirect subsidies by banks to billers Consumer Electricity Bank A Telecom Bank B Water Bank C Government Bank D

9. It was clear that there was a need for a centralized system that acts as an interface between billers and banks, so billers can use the banking channels with low cost… 2000’s Pre SADAD Bill Payment Network SADAD EBPP Model Consumer Consumer Electricity Bank A Biller A Bank A SADAD Telecom Bank B Biller B Bank B Water Bank C Bank N Government Bank D Biller N

10. It was clear that there was a need for a centralized system that acts as an interface between billers and banks, so billers can use the banking channels with low cost… 2000’s SADAD EBPP Model • Centralized and shared infrastructure • Provides all Billers with access to Banks channels without discrimination • increase transparency of government collection process • significantly reducing the time spent by consumers paying bills • Improve availability of collected Money from 14-60 days to only 1 business day Consumer Biller A Bank A SADAD Biller B Bank B Bank N Biller N

11. Today, SADAD has reformed the payment market by introducing a full array of payment products that is accessible to every consumer in Saudi Arabia Beginning 1980’s Problem 1990’s Solution 2000’s Reform Today

12. Today there are four major products offered through all the banking channels (ATM, Phone Banking, Internet Banking and Branches) SADAD Products And Delivery Channels Bill Payment Prepaid Services MOI Services Refund Automated Teller Machines Online Banking Phone Banking Banks Branches Consumers

13. SADAD expanded its network through on-boarding a total of 104 billers as of Q1 2011 SADAD Network Growth – Billers

14. Different billers in various industries have been linked indicating SADAD’s ability to serve all sectors that require electronic payment services Government Billers 51% Non -Government Billers 49% ISPs Customs Initiatives & Projects Ministries Telecoms Utility Services Stock market information Traffic Violation Insurances Passport Department Department of Zakat Personal Loans Credit Cards Chambers of Commerce Press Labor Importation Driving License Government funds Airlines Media Installments Post Services Municipalities Universities

15. The number of bills paid via SADAD grew exponentially to reach a record 28.5 million bills paid in Q1-2011. SADAD Quarterly Payments Transactions - Volume (in ,000 payments)

16. Government Vs. Non Government payment Volume Government Payment Volume

17. The total value for the quarterly transactions hit SAR 21.65 billion in Q1-2011. SADAD Quarterly Payments Transactions – Value (in 000,000 SAR)

18. Government Vs. Non Government payment Value Government Payment Value

19. SADAD shifted consumer behavior from physical channels (branches) to electronic channels SADAD Market Share Trends SADAD Channels Usage Trends

20. Awards and certificates UN Public Service Award GCC e-Government Award Injaz e-Government Achievement Award ISO Quality Mgmt ISO Information Security Mgmt

21. Thank You