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

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

4. SADAD Payment System The first stage started in the beginning of the 1980s when SAMA mandated that al banks should accept bill payment at their branches… 4 1980s 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 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 Electricity Telephone Water Bank Branches Utilities Offices Bank Branches Utilities Offices

5. SADAD Payment System 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 5 Beginning 1980s Beginning 1980s Problem 1990s Problem 1990s Solution 2000s Solution 2000s Reform Today Reform Today

6. SADAD Payment System 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... 6 1990s 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 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 Number of mentions, Time Consuming =100 Having to keep track of multiple bills Time consuming Delays/Loss in postage Overlooking payment dates Disconnection of service due to delays in bill processing Inconvenient Handling large cash amounts 55 63 100 67 72 52 020406080100 Top Consumer Issues Concerning Bill Payment

7. SADAD Payment System 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… 7 Beginning 1980s Beginning 1980s Problem 1990s Problem 1990s Solution 2000s Solution 2000s Reform Today Reform Today

8. SADAD Payment System 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.. 8 Pre SADAD Bill Payment Network Electricity Telecom Water Bank A Bank B Bank C Government Bank D Consumer 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 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 2000s

9. SADAD Payment System 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… 9 SADAD EBPP Model SADAD Biller A Biller B Biller N Bank A Bank B Bank N Consumer Pre SADAD Bill Payment Network Electricity Telecom Water Bank A Bank B Bank C Government Bank D Consumer 2000s

10. SADAD Payment System 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… 10 SADAD EBPP Model SADAD Biller A Biller B Biller N Bank A Bank B Bank N Consumer 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 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 2000s

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

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

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

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

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

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

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

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

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

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

21. SADAD Payment System Thank You